Editor's note: This is a developing story. Please check back for details.
WhiteHawk Energy LLC on Aug. 9 released a public letter proposing a merger with PHX Minerals Inc. in a stock-for-stock transaction to form a publicly traded corporation to Mark Behrman, the chairman of PHX’s board of directors.
The letter comes after several unsuccessful attempts to engage PHX Minerals’ board of directors and management productively, having first made an initial proposition to PHX on May 31 and again in a revised letter on June 20. WhiteHawk is disclosing the contents of the letter to notify PHX stockholders of the potential benefits of a merger.
In the non-binding offer letter, WhiteHawk proposes PHX stockholders would own approximately 61% of the pro forma equity of WhiteHawk Minerals Corp. and receive a one-time $0.20 per share cash dividend.
"While we have been disappointed with the engagement to date, we believe today marks a new beginning of the discussions between WhiteHawk and PHX Minerals," said Daniel C. Herz, WhiteHawk's chairman and CEO, said in a press release. "PHX stockholders deserve the opportunity to consider and communicate directly with the company regarding their views of the substantial benefits of our proposal."
More benefits included in the proposal involve a larger pro forma asset base, which includes WhiteHawk’s 850,000 gross unit acres in the Marcellus and Haynesville shales; an increased stockholder payout ratio of 50% to 60% of distributable cash flow; increasing the dividend by more than 100%; and immediate accretion to PHX’s distributable cash flow per share.
“We firmly believe that your persistent unwillingness to engage in discussions regarding this highly beneficial transaction is contrary to the interests of PHX stockholders,” the Aug. 9 letter from Herz to Behrman stated.
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