The board of SilverBow Assets Inc. has as soon as once more turned down the newest proposal from asset supervisor Kimmeridge to merge it with Kimmeridge Texas Fuel (KTG).
In a letter to shareholders, the board stated that Kimmeridge’s most up-to-date merger proposal “considerably undervalues SilverBow” after consulting unbiased monetary and authorized advisors. The board underscored the significance of conducting due diligence on KTG, as related info is required “to find out the precise worth, not Kimmeridge’s assertion of worth, of the KTG property”.
“Apparently, Kimmeridge has not tried to promote KTG in a aggressive course of, which might be a logical motion to crystallize worth for KTG’s traders if KTG is as priceless as Kimmeridge claims it to be,” the board continued within the letter. “Notably, Kimmeridge has not made public the related info for SilverBow and its shareholders to have the ability to independently consider these property”.
“SilverBow has been and continues to be open to exploring a transaction at an acceptable valuation”, the corporate’s board stated. Nonetheless, it stated that Kimmeridge was demanding that SilverBow purchase KTG on its proposed valuation and financing phrases, “as with prior engagements”.
The board additional wrote that “Kimmeridge is attempting to put in its director nominees on the board, with a purpose to take management of the corporate with out paying an acceptable premium and have their newly appointed administrators drive the KTG transaction at a later date”.
As such, the board urged shareholders to reject voting for the three administrators nominated by Kimmeridge on the upcoming SilverBow annual assembly of shareholders, and as an alternative vote for the three administrators nominated by the board.
Kimmeridge Response
In response, Kimmeridge printed a letter of its personal, signed by its managing director Ben Dell. Within the letter Kimmeridge accused the SilverBow board and administration group of entrenching themselves “whereas summarily rejecting compelling proposals and denying shareholders the precise to fiduciaries who will independently analyze alternatives to maximise long-term worth”.
“We imagine {that a} robust majority of shareholders help genuine engagement and would vote in favor of the March 13 proposal if the incumbent board did not stand in the way in which,” Kimmeridge wrote. “In our view, the board and administration’s need to keep up the established order (together with their positions and compensation) prevents the board from presenting this value-creating transaction to shareholders”.
Kimmeridge additionally famous that it has lately offered all the knowledge that the SilverBow board is looking for, and would have shared it sooner had the board requested it earlier. Kimmeridge stated it printed a web site with all of the requested info containing extra element on KTG’s financials and asset base, together with effectively information, working statistics and stock maps.
“Ought to the board proceed to stonewall, mislead traders, and fail to offer all SilverBow shareholders the complete advantage of unbiased oversight of the administration group and evaluation of the March 13 proposal, then we imagine the perfect path ahead can be for SilverBow shareholders to elect our three unbiased, highly-qualified nominees to the board,” Kimmeridge concluded.
Underneath the phrases of the March proposal, Kimmeridge would contribute the KTG property to SilverBow in change for 32.4 million shares priced at $34 per share. As well as, Kimmeridge would inject $500 million of contemporary fairness capital on the identical value of $34 per share, in change for 14.7 million shares.
On the closing of the proposed transaction, Kimmeridge and its associates would personal a majority of the excellent shares of the mixed firm, with a complete of fifty.3 million shares of frequent inventory inclusive of Kimmeridge’s present 3.3 million share place in SilverBow.
Kimmeridge, which holds 12.9 p.c of SilverBow’s excellent shares, famous that the KTG property have an fairness worth of $1.1 billion and an anticipated enterprise worth of $1.4 billion at closing of the proposed transaction.