A model is presented that assumes the existence of cold matter immersed as blobs within the central X-ray continuum emitting regions of Seyfert galaxies. Monte Carlo simulations are used to calculate the effect of these blobs on the emergent intermediate (1-100 keV) X-ray spectrum. Model spectra are calculated for a range of blob densities from 10(8) to 10(18) cm-3 and for volume filling fractions from 0 to 1. Various features of these spectra are then analysed in detail. In particular, an iron fluorescence line is produced with an equivalent width up to about 400 eV for semi-opaque blobs and up to about 100 eV for fully opaque blobs. Our results also suggest that, for the reprocessing effect of the blobs to alter significantly the primary power-law spectrum, the individual blob size should be smaller than the size of the continuum region by a factor of at least 100. The simulated spectra produced by fully opaque blobs are in agreement with observations of most Seyfert galaxies.