Remains hopeful that SilverBow's Board will reverse course and start engaging in a constructive dialogue
Requests Board's view of relative value by April 15 – Board previously stated it was 'open to exploring transactions at appropriate valuations' so it should have information on hand
NEW YORK and DENVER, April 11, 2024 /PRNewswire/ -- Kimmeridge, an alternative asset manager focused on the energy sector and the largest shareholder of SilverBow Resources ("SilverBow") holding 12.9% of outstanding shares, today provided additional information to SilverBow's Board of Directors and is making it available to the public as well. Kimmeridge is hopeful this supplementary information will prompt SilverBow's Board to initiate a substantive due diligence process with respect to Kimmeridge's March 13, 2024 proposal to combine Kimmeridge Texas Gas ("KTG") and SilverBow (the "Proposal").
Additional information regarding the Proposal and KTG's asset base can be found at www.Kimmeridge.com/sbow/.
The full text of Kimmeridge's letter to SilverBow's Board is included below.
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Dear Mr. Woolverton,
We are in receipt of your letter requesting additional diligence items. We have made the requested information available in public and are eager to share the remainder of the information subject to a standard non-disclosure agreement. As you know, per our offer letter on March 13, 2024 (the "Proposal") and our supplemental data release on April 1, 2024, we had already pre-populated a data room for your team with this and other information that has been available to you for quite some time. During this period, we have stood ready to give you full access to the data room and answer any questions you or your advisors may have.
Unfortunately, since making our Proposal, we have heard nothing from SilverBow or its advisors regarding substantive engagement in a due diligence process to assess our offer.
Kimmeridge delivered a financed, premium proposal for a multi-billion-dollar combination. In response, we have received 20 random questions as addendums to two letters. Both letters were delivered minutes following your filing of proxy solicitation materials, wherein you rejected our Proposal and then said you needed more information to evaluate its value. All together, you have made it clear that you plan to refuse to engage seriously and instead intend 'take this to the annual meeting,' as was intimated to one of the Board nominees in their interview process with you and the participating SilverBow Board members.
Turning to the most recent eight questions we received, we are unclear why certain of this information is of value to you, especially in the absence of any contact from your team.
For example:
- You ask for 2023 financials, but under our Proposal SilverBow would be the surviving entity and we have made available to you a pro forma balance sheet as of the proposed closing date.
- You ask for our RBL details, but our Proposal contemplates providing replacement debt on a combination.
- You ask for the Laredo purchase price, but you and your advisors were provided this in August 2022 and again in February 2023, and it has not changed.
- Lastly you have requested capital allocation by area and type curve but we have already provided the drilling program by type curve. If your team does not have an accurate understanding of the phase windows across the Eagle Ford we would welcome a meeting to further their understanding, but this raises its own concerns.
The investment community recognizes your playbook to date. You claim to evaluate a transaction but will, inevitably, walk away from any deal in which SilverBow is the smaller company in a merger. Your strategy appears premised on buying time, hoping that the price of the commodity rises, the annual meeting passes or that constructive shareholders just walk away. In our view, it is self-preservation at the expense of shareholder value. You are so focused on 'fighting Kimmeridge' at all times and at all costs that you've lost sight of the stakeholders you were either elected or appointed to serve – all of which we believe necessitates the need for fresh perspectives in the SilverBow Boardroom.
As we have delivered the combination proposal that you and your ...