TSX: PSD
CALGARY, Oct. 10 /CNW/ - The Board of Directors of Pulse Data Inc. ("Pulse" or the "Company"), after reviewing and considering the October 9, 2007 amendment and extension to the offer by 6818862 Canada Inc., an indirect wholly-owned subsidiary of Seitel, Inc., to purchase all of the common shares of Pulse, continues to unanimously recommend that shareholders reject the Seitel Offer. The Board further recommends that any shareholders who may have tendered their Pulse shares to the Seitel Offer withdraw them.
In its press release of October 9, 2007, Seitel makes several incorrect allegations that Pulse has attempted to mislead its shareholders with respect to the Seitel Offer, and again states that the Seitel Offer is its "best and final offer" - having already increased the offer once after making the same claim.
ValueAct Capital, the parent company of Seitel, has further threatened to sell its Pulse shares on the open market if the Seitel Offer is not successful. In the view of the Pulse Board of Directors, this is a scaremongering pressure tactic to coerce Pulse shareholders into accepting an inadequate offer that they would otherwise reject. Shareholders must recognize that Seitel and ValueAct Capital are acting solely in their own interests.
COERCIVE SCAREMONGERING BY VALUEACT AND SEITEL
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ValueAct Capital and Seitel are attempting to coerce Pulse shareholders into accepting the inadequate Seitel Offer. They are doing so in a number of ways, including disseminating misleading claims that the Board and management are not properly advising shareholders, making renewed threats that their latest offer is the "best and final offer" (after having already increased their offer once after having previously made the same claim) and threatening that if the Seitel Offer is not "successful", ValueAct Capital intends to sell all of its Pulse shares on the open market.
The latter threat seems inconsistent with their original stated purpose of acquiring Pulse shares "for investment purposes". It appears aimed at pressuring Pulse shareholders to accept the Seitel Offer out of fear that the market price could drop precipitously were ValueAct Capital to sell its shares abruptly. The Pulse Board does not believe that ValueAct Capital would act in such a manner. Logic suggests ValueAct Capital and its investors would wish to maximize their cash exit value if they decide to end their attempt to take over Pulse.
In any event, if ValueAct were to pursue that approach, the Pulse Board believes it should be regarded as an attractive buying opportunity, given Pulse's growth potential and its recently increased dividend to $0.20 per share annually. In that regard, Pulse has verbally received preliminary indications from a number of Pulse shareholders and other interested parties expressing their interest in acquiring ValueAct Capital's Pulse shares should ValueAct Capital be inclined to sell.
REFUSAL TO NEGOTIATE:
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Seitel continues to make certain misleading statements with respect to its attempts to negotiate with Pulse. Pulse's attempts to negotiate an acceptable confidentiality agreement with Seitel were rejected by Seitel as Seitel was not prepared to comply with the "permitted bid" requirements of Pulse's Shareholder Rights Plan. The Plan, which was overwhelmingly approved by Pulse's shareholders, would prevent Seitel from pursuing a creeping take-over strategy.
Notwithstanding Seitel's rejection of the confidentiality agreement, Pulse's advisers repeatedly informed Seitel that Pulse was prepared to enter into negotiations without first agreeing to a confidentiality agreement. On one occasion, Pulse proposed a price at which it was prepared to enter into negotiations. Seitel has, to date, rejected each of these proposals to negotiate.
SHAREHOLDERS NOT TENDERING:
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Significant shareholders and the directors, officers and certain consultants of Pulse, who collectively represent in excess of 50% of Pulse's outstanding shares (fully diluted) have verbally restated in the last two days that they do not intend to tender the Pulse shares owned or controlled by them to the Seitel Offer. As a result, the Seitel Offer will not succeed unless Seitel waives its minimum tender condition.
Q3 RESULTS UPDATE:
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On September 21, 2007 Pulse reported that as of that date it had attained cash data library sales for Q3, 2007 of $8.7 million, surpassing the previous Q3 record for cash data library sales of $8.6 million, set in 2005. Pulse reports that it finished the quarter with a record $9.1 million in cash data library sales, and a total of $10.8 million in total seismic revenue, which included partial delivery of a 3D seismic participation survey in the Deep Basin area of west-central Alberta.
As at September 30, 2007, Pulse had a net debt position of $21.8 million, consisting of a cash balance of $12.2 million offsetting the total long-term debt balance of $34.0 million. This is a favourable improvement to the December 31, 2006 net debt position of $37.5 million, consisting of $2.5 million in cash offsetting the then long term debt balance of $40.0 million.
ADDITIONAL REASONS FOR REJECTING THE SEITEL OFFER:
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Pulse's directors and senior management are unanimous in the view that Pulse's business plan of growing its seismic data library through strategic, high-quality seismic data acquisitions and participation surveys offers attractive growth potential and superior value for all shareholders to that being offered under the Seitel Offer.
The Board reiterates its previously stated additional reasons for its recommendation that shareholders reject the Seitel Offer. These additional reasons are that the Seitel Offer:
- does not take into account Pulse's growth potential;
- does not offer a control premium over the value of the Pulse shares;
- does not reflect post-merger synergies;
- does not reflect Pulse's three consecutive quarters of growth and
record sales;
- does not reflect Pulse's increased dividend;
- does not offer a significant premium to the market price; and
- is part of a creeping take-over strategy by Seitel.
UPDATE ON REVIEW OF STRATEGIC ALTERNATIVES
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Following the mailing of Pulse's Notice of Change to its Directors' Circular dated October 3, 2007, Pulse received verbal indications from a potential strategic buyer indicating that such buyer was continuing to pursue a possible acquisition transaction at a price level superior to that being offered by Seitel. No assurance can be given that an acceptable proposal will be received from such buyer or as to when a proposal, if any, may be received.
RECOMMENDATION:
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The Board of Directors of Pulse unanimously recommends that shareholders reject the Seitel Offer and not tender their shares of Pulse to the Seitel Offer. The Board further recommends that any shareholders who may have tendered their Pulse shares to the Seitel Offer withdraw them. The Board's decision is unanimously supported by Pulse's senior management team.
On or before October 12, 2007, Pulse will mail to the shareholders its Notice of Change to the Directors' Circular responding to the Seitel Offer. For shareholders contemplating tendering their shares, the Board of Directors recommends that shareholders not make a decision on the Seitel Offer until such time as they have received and considered the Directors' Circular.
Pulse continues to engage Georgeson Shareholder Communications Canada Inc. to act as information agent with respect to the Seitel Offer, to assist Pulse in informing shareholders as to the views of the Board of Directors with respect to the Seitel Offer. Shareholders can contact Georgeson if they have any questions regarding the Seitel Offer at:
Georgeson Shareholder Communications Canada Inc.
100 University Avenue
11th Floor, South Tower
Toronto, Ontario
M5J 2Y1
North American Toll Free Number: 1-888-605-7616
DEFERRAL OF SEPARATION TIME:
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Pulse also announces that the Board has deferred the Separation Time under the Shareholder Rights Plan in respect of the Seitel Offer to October 22, 2007.
Disclaimer: Certain information contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Investors are encouraged to review the "Risk Factors" section of the Management's Discussion and Analysis in the Company's most recent Annual Report and interim reports for a discussion of risks that could affect the Company's operations and financial results. Forward-looking statements are based upon management's assumptions, expectations and estimates at the time that such statements are made. Pulse does not update forward-looking statements should circumstances change or management's assumptions, expectations or estimates change, unless required by law.