WhiteHawk Energy Reiterates Proposal to Acquire PHX Minerals, Inc. for $4.00 per Share in an All-Cash Transaction
WhiteHawk Energy has reiterated its proposal to acquire PHX Minerals for $4.00 per share in an all-cash transaction. This offer represents a 19% premium to PHX's 90-day volume weighted average price and a 17% premium to its 30-day volume weighted average price. WhiteHawk currently owns 946,506 common shares of PHX, approximately 2.5% of the outstanding common stock.
The proposal includes an option for qualified PHX stockholders to exchange their shares for WhiteHawk common shares. WhiteHawk has been attempting to engage with PHX for over 18 months, expressing concerns about PHX's excessive G&A expenses, dilutive acquisitions, and minimal dividends. WhiteHawk urges PHX's Board of Directors to engage in good faith negotiations, highlighting PHX's underperformance compared to peers and market indices since 2020.
WhiteHawk Energy ha ribadito la sua proposta di acquisire PHX Minerals per 4,00 dollari per azione in un'operazione totalmente in contante. Questa offerta rappresenta un premio del 19% rispetto al prezzo medio ponderato per volume di 90 giorni di PHX e un premio del 17% rispetto al suo prezzo medio ponderato per volume di 30 giorni. Attualmente, WhiteHawk possiede 946.506 azioni ordinarie di PHX, circa il 2,5% del capitale sociale circolante.
La proposta include un'opzione per gli azionisti qualificati di PHX di scambiare le loro azioni per azioni ordinarie di WhiteHawk. WhiteHawk ha cercato di coinvolgere PHX per oltre 18 mesi, esprimendo preoccupazioni riguardo ai costi generali e amministrativi eccessivi, acquisizioni dilutive e dividendi minimi di PHX. WhiteHawk esorta il Consiglio di Amministrazione di PHX a intraprendere negoziati di buona fede, evidenziando il rendimiento sottotono di PHX rispetto ai concorrenti e agli indici di mercato dal 2020.
WhiteHawk Energy ha reiterado su propuesta para adquirir PHX Minerals por 4,00 dólares por acción en una transacción completamente en efectivo. Esta oferta representa un prima del 19% respecto al precio promedio ponderado por volumen de 90 días de PHX y un prima del 17% respecto a su precio promedio ponderado por volumen de 30 días. Actualmente, WhiteHawk posee 946,506 acciones comunes de PHX, aproximadamente el 2,5% del capital social en circulación.
La propuesta incluye una opción para que los accionistas calificados de PHX intercambien sus acciones por acciones comunes de WhiteHawk. WhiteHawk ha estado intentando involucrar a PHX durante más de 18 meses, expresando preocupaciones sobre los excesivos gastos generales y administrativos, adquisiciones dilutivas y los mínimos dividendos de PHX. WhiteHawk insta a la Junta Directiva de PHX a participar en negociaciones de buena fe, destacando el bajo rendimiento de PHX en comparación con sus pares y los índices de mercado desde 2020.
WhiteHawk Energy는 PHX Minerals 인수를 재확인했습니다, 주당 4.00달러로 전액 현금 거래로 진행됩니다. 이 제안은 PHX의 90일 거래량 가중 평균 가격에 대해 19% 프리미엄을 나타내며 30일 거래량 가중 평균 가격에 대해 17% 프리미엄에 해당합니다. 현재 WhiteHawk는 946,506주의 보통주를 PHX에서 소유하고 있으며, 이는 대략 2.5%에 해당합니다.
이 제안에는 자격을 갖춘 PHX 주주가 자신의 주식을 WhiteHawk의 보통주로 교환할 수 있는 옵션이 포함되어 있습니다. WhiteHawk는 PHX와의 소통을 위해 18개월 이상 노력해왔으며, PHX의 과도한 일반 관리 비용, 희석적 인수 및 최소 배당금에 대한 우려를 표명해왔습니다. WhiteHawk는 PHX 이사회가 선의의 협상에 참여할 것을 촉구하며, 2020년 이후 동종 업계 및 시장 지수 대비 PHX의 저조한 성과를 강조하고 있습니다.
WhiteHawk Energy a réitéré sa proposition d'acquérir PHX Minerals pour 4,00 $ par action dans une transaction entièrement en espèces. Cette offre représente une prime de 19% par rapport au prix moyen pondéré par le volume de PHX sur 90 jours et une prime de 17% par rapport à son prix moyen pondéré par le volume sur 30 jours. Actuellement, WhiteHawk détient 946 506 actions ordinaires de PHX, soit environ 2,5% des actions ordinaires en circulation.
La proposition comprend une option pour que les actionnaires qualifiés de PHX échangent leurs actions contre des actions ordinaires de WhiteHawk. WhiteHawk tente de dialoguer avec PHX depuis plus de 18 mois, exprimant des inquiétudes concernant les coûts généraux et administratifs excessifs, les acquisitions dilutives et les dividendes minimaux de PHX. WhiteHawk exhorte le Conseil d'administration de PHX à s'engager dans des négociations de bonne foi, soulignant la mauvaise performance de PHX par rapport à ses pairs et aux indices de marché depuis 2020.
WhiteHawk Energy hat sein Angebot zur Übernahme von PHX Minerals bekräftigt zu einem Preis von 4,00 $ pro Aktie in einer Bartransaktion. Dieses Angebot stellt eine Prämie von 19% im Vergleich zum volumenweighted Durchschnittspreis von PHX über 90 Tage und eine Prämie von 17% im Vergleich zum volumenweighted Durchschnittspreis über 30 Tage dar. WhiteHawk besitzt derzeit 946.506 Stammaktien von PHX, was etwa 2,5% des ausstehenden Kapitals entspricht.
Das Angebot umfasst eine Option für qualifizierte PHX-Aktionäre, ihre Aktien gegen Stammaktien von WhiteHawk einzutauschen. WhiteHawk versucht seit über 18 Monaten, mit PHX in Kontakt zu treten, und äußert Bedenken hinsichtlich der übermäßigen Gemeinkosten, verwässernden Akquisitionen und minimalen Dividenden von PHX. WhiteHawk fordert den Vorstand von PHX auf, in gutem Glauben Verhandlungen zu führen und hebt die schwache Leistung von PHX im Vergleich zu Wettbewerbern und Marktindizes seit 2020 hervor.
- WhiteHawk's offer represents a 19% premium to PHX's 90-day volume weighted average price
- The proposal includes an option for qualified PHX stockholders to exchange shares for WhiteHawk common shares
- WhiteHawk has acquired 2.5% of PHX's outstanding common stock, aligning interests with other shareholders
- PHX has been unwilling to engage with WhiteHawk over the past 18 months
- PHX has reportedly spent $40.1 million in cash G&A since 2020, while returning only $11.4 million to stockholders through dividends
- PHX's stock price has significantly underperformed compared to mineral peers, gas-weighted E&P companies, and the broader market since 2020
Insights
WhiteHawk Energy's proposal to acquire PHX Minerals for
The proposal highlights several concerns about PHX's current management, including:
- Excessive G&A expenses (
$40.1 million since 2020) - dividend payments (
$11.4 million since 2020) - Underperforming stock price compared to peers and broader market
- Potentially misaligned management compensation
WhiteHawk's ownership of
This situation underscores the importance of corporate governance and responsiveness to shareholder concerns. PHX's board will need to carefully evaluate this offer against the company's standalone prospects and potential for value creation.
The public disclosure of WhiteHawk's acquisition proposal raises several legal considerations:
- Fiduciary duty: PHX's board must carefully evaluate the offer to ensure they're acting in the best interests of shareholders. Their repeated rejections without substantial engagement could be scrutinized.
- Disclosure obligations: PHX may need to file an 8-K or other SEC disclosures in response to this public offer.
- Potential proxy contest: If PHX continues to resist, WhiteHawk could initiate a proxy fight to replace board members.
- Regulatory review: Any eventual merger would likely require Hart-Scott-Rodino antitrust review.
- Securities law compliance: Both companies must ensure all public statements are accurate and not misleading.
The letter's detailed timeline of interactions could serve as evidence in potential shareholder litigation if PHX is perceived as entrenching management at the expense of shareholder value. WhiteHawk's public disclosure strategy appears designed to apply pressure and potentially rally other shareholders to their cause.
Proposal reflects a
WhiteHawk letter to PHX Board of Directors highlights PHX stockholders suffering from excessive G&A expenses, dilutive acquisitions, minimal dividends, and as a result, persistent stock price underperformance
WhiteHawk has acquired and currently owns 946,506 common shares of PHX or approximately
Urges the PHX Board of Directors to engage with WhiteHawk to pursue and complete a transaction following unwillingness to engage over the past 18 months
(Graphic: Business Wire)
Under the terms of the proposal, PHX common stockholders would receive
The non-binding offer was reiterated in a letter sent today to Mr. Behrman after 18 months of several public and private proposals, as detailed in the letter. WhiteHawk is making public its continued efforts following months of private conversations in order to bring transparency to the situation and ensure that all stockholders are fully informed and can advocate for an outcome that maximizes value for everyone involved. WhiteHawk also disclosed that it now owns approximately
“We are disappointed that PHX has been unwilling to engage with WhiteHawk over the past 18 months, which has forced us to make public this proposal. Over that period of time, we have adjusted our proposals to meet the ever-shifting requests of PHX and provided everything we believe necessary to pursue a value enhancing transaction for all PHX stockholders,” said Daniel C. Herz, WhiteHawk’s Chairman and Chief Executive Officer. “We strongly believe that our proposal is in the best interest of all stockholders involved, and believe it is imperative to publicly illuminate the destruction of value, as compared to the opportunity for a sale at a significant premium. Since 2020, PHX has consumed over
The full text of WhiteHawk’s October 14, 2024 letter is included below.
Advisors
WhiteHawk has retained Stephens Inc. as its financial advisor and Weil, Gotshal & Manges LLP as its legal advisor.
WhiteHawk’s October 14, 2024 Letter to PHX
October 14, 2024
PHX Minerals Inc. Board of Directors
c/o Mark Behrman, Chairman of the Board of Directors
1320 South University Drive
Suite 720
Dear Mark,
We are writing to urge the Board of Directors of PHX Minerals, Inc. (“PHX”) to engage with WhiteHawk Energy, LLC (together with its subsidiaries, “WhiteHawk”) to pursue and complete a transaction in which WhiteHawk acquires PHX for
The WhiteHawk proposal to acquire PHX for
-
a
19% premium to PHX’s 90 day volume weighted average price of$3.36 -
a
17% premium to PHX’s 30 day volume weighted average price of$3.42
It is important to note that PHX’s share price has consistently failed to appreciate in more favorable natural gas price environments over the past several years. WhiteHawk’s
As described in further detail below, our efforts to initiate a meaningful dialogue have been met with minimal response. Given our conviction that a transaction represents a significant opportunity to create value for all of your stockholders, we feel compelled to once again take our efforts public. We believe that transparency at this juncture is essential to ensure that all of your stockholders are fully informed and can advocate for an outcome that maximizes their value. As you know, WhiteHawk has been acquiring shares of PHX common stock in the open market over the past several months, and now owns 946,506 shares or approximately
Additionally, we believe it is crucial to highlight the significant destruction of stockholder value by PHX management since early 2020, when the current executive leadership was appointed. During this period, management has attempted to steer PHX in a new strategic direction. However, these efforts have clearly failed to generate value for stockholders. Instead, stockholders have suffered from excessive general and administrative (“G&A”) expenses, dilutive acquisitions, minimal dividends, and as a result, persistent stock price underperformance.
Since 2020, management has returned only
WhiteHawk is not alone in its assessment of PHX’s mismanagement of its assets. Numerous other PHX stockholders have also expressed concern over PHX’s direction in recent years, both privately in discussions with WhiteHawk and PHX’s management team and publicly. Despite these ongoing conversations, there has been no meaningful change in PHX’s business strategy. Given the consistent dissatisfaction voiced by stockholders and the lack of management engagement with WhiteHawk, we believe it is time to take the next step and update the public on the conversations that have transpired between WhiteHawk and PHX over the past 18 months, including since the publication of our last public proposal in August 2023. Furthermore, WhiteHawk is urging PHX’s Board of Directors, management, and their advisors to engage immediately with WhiteHawk in regards to our proposal.
Overview of Conversations To Date Between WhiteHawk and PHX
In May 2023, following your CEO’s unwillingness to meet with the WhiteHawk executive team, WhiteHawk privately submitted a proposal to merge WhiteHawk into PHX and form a new publicly traded company, which would be larger than PHX, create a more liquid stock, and improve asset quality. Additionally, that proposed transaction offered a one-time cash dividend in excess of two years’ worth of PHX’s most recent quarterly dividends at that time, plus significant free cash flow accretion and a substantial increase in dividends per share to PHX’s stockholders. On June 12, 2023, the PHX Board rejected that proposal, stating both that the proposal undervalued PHX and that PHX did not have enough information to value WhiteHawk. These statements in and of themselves are in direct opposition, as it is impossible to state that WhiteHawk had undervalued PHX in an all-stock transaction if PHX itself had not yet evaluated the value of WhiteHawk.
On June 20, 2023, we submitted a revised private proposal and opened up a data room for PHX to evaluate and conduct diligence on WhiteHawk. After five weeks, at the end of July, without a single due diligence question asked, PHX again rejected the WhiteHawk proposal, citing factors which clearly indicated a lack of diligence and understanding of WhiteHawk’s business. On August 8, 2023, WhiteHawk publicly proposed a merger between WhiteHawk and PHX, including a one-time cash dividend to PHX stockholders, which was more than twice the annualized PHX quarterly dividends being paid at such time, offering stockholders significant upfront cash, as well as the opportunity to participate in a larger, more liquid, and improved company, the very elements which PHX’s management team that same day on the second quarter earnings call stated that they desired. Despite these stated desires, PHX’s Board rejected that proposal on August 15, 2023.
Following several conversations, and at the request of PHX, on November 22, 2023, WhiteHawk submitted a private cash proposal to acquire PHX for
After this proposal, WhiteHawk was advised on February 20, 2024 that management was unwilling to transact in a low natural gas price environment. However, natural gas prices for 2025, 2026, and 2027 had remained almost entirely flat from the beginning of discussions in May 2023 until February 2024, and essentially flat from delivering its previous letter on January 26, 2024 until February 20, 2024. Further, WhiteHawk has indicated repeatedly the potential to increase its cash offer following diligence information being provided, as well as the opportunity for PHX stockholders to participate in the combined company. PHX’s unwillingness to engage came despite WhiteHawk increasing its proposed share price premium to maintain its previous
On April 29, 2024, WhiteHawk delivered yet another private letter to PHX reiterating its willingness to proceed with either an all-cash transaction to acquire PHX for
Finally, during the summer of 2024, WhiteHawk met with PHX’s financial advisor, RBC, and informed them that if PHX was unwilling to engage, WhiteHawk would be forced to make public its previous proposals.
Summary & Next Steps
Throughout the last 18 months, WhiteHawk has constantly indicated its flexibility and strong interest in completing a business combination, reiterating multiple times an all-cash offer to purchase PHX for
WhiteHawk again urges the PHX Board of Directors to engage with WhiteHawk to complete a transaction. Additionally, WhiteHawk calls on all fellow stockholders to demand that the PHX Board of Directors pursue the value creating opportunity described in this letter.
As a reminder, WhiteHawk has retained Stephens Inc. as its financial advisor and Weil, Gotshal & Manges LLP as its legal advisor. We look forward to having the opportunity to pursue a transaction with you promptly, and we remain available at your convenience to discuss any aspect of our proposal.
Neither this letter nor the terms of any proposal constitute a binding or enforceable agreement of either WhiteHawk or PHX. Any binding agreement with respect to either proposal will be reflected solely in definitive documentation to be negotiated, executed and delivered by WhiteHawk and PHX.
Sincerely,
/s/ Daniel C. Herz______
Daniel C. Herz
Chairman and Chief Executive Officer
WhiteHawk Energy, LLC
* * * *
About WhiteHawk Energy
WhiteHawk Energy, LLC is focused on acquiring mineral and royalty interests in top tier natural gas resource plays, including the Haynesville and Marcellus Shales. The management team at WhiteHawk Energy has successfully grown over
Additional Information
This press release does not constitute an offer to buy or solicitation of an offer to sell any securities. This press release relates to a proposal which WhiteHawk has made for a combination with PHX. In furtherance of this proposal and subject to future developments, WhiteHawk (and, if a negotiated transaction is agreed, PHX) may file one or more registration statements, proxy statements or other documents with the
Investors and security holders of WhiteHawk and PHX are urged to read the proxy statement(s), registration statement, prospectus and/or other documents filed with the SEC carefully in their entirety if and when they become available as they will contain important information about the proposed transaction. Any definitive proxy statement(s) or prospectus(es) (if and when available) will be mailed to stockholders of PHX, as applicable. Investors and security holders will be able to obtain free copies of these documents (if and when available) and other documents filed with the SEC by PHX through the website maintained by the SEC at http://www.sec.gov.
This press release is neither a solicitation of a proxy nor a substitute for any proxy statement or other filings that may be made with the SEC. Nonetheless, WhiteHawk and its executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transactions. Additional information regarding the interests of such potential participants will be included in one or more registration statements, proxy statements or other documents filed with the SEC if and when they become available. INVESTORS AND SECURITY HOLDERS OF PHX ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. These documents (if and when available) may be obtained free of charge from the SEC’s website at http://www.sec.gov.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Such statements are based on WhiteHawk’s management’s beliefs and assumptions based on information currently available to WhiteHawk’s management. All statements in this press release, other than statements of historical fact, are forward-looking statements that may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause WhiteHawk’s or PHX’s actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Part I, Item 1A, “Risk Factors” in PHX’s Annual Reports on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) for the fiscal year ended December 31, 2023 and in other filings with the SEC. These include, but are not limited to: (i) the ultimate outcome of any possible transaction between WhiteHawk and PHX, including the possibility that PHX will reject the proposed transaction with WhiteHawk; (ii) uncertainties as to whether PHX will cooperate with WhiteHawk regarding the proposed transaction; (iii) the effect of the announcement of the proposed transaction on the ability of WhiteHawk and PHX to operate their respective businesses and retain and hire key personnel and to maintain favorable business relationships; (iv) the timing of the proposed transaction; (v) the ability to satisfy closing conditions to the completion of the proposed transaction (including any necessary stockholder approvals); (vi) other risks related to the completion of the proposed transaction and actions related thereto; (vii) changes in demand for WhiteHawk’s or PHX’s products or services; (viii) impacts of natural disasters, adverse changes in laws and regulations including governing property tax, evictions, rental rates, minimum wage levels, and insurance, adverse economic effects from the COVID-19 pandemic, international military conflicts, or similar events impacting public health and/or economic activity; (ix) adverse impacts to WhiteHawk or PHX and their respective customers from inflation, unfavorable foreign currency rate fluctuations, changes in federal or state tax laws; and (x) security breaches, including ransomware, or a failure of WhiteHawk’s or PHX’s respective networks, systems or technology.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241014523828/en/
Corporate Relations
jslotterback@whitehawkenergy.com
Source: WhiteHawk Energy, LLC
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