[ |
] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
1.
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to consider and vote on the
Agreement and Plan of Merger, dated as of October 28, 2018 (the “Merger Agreement”), by and among Denbury Resources Inc., Dragon Merger Sub Inc., DR Sub LLC and Penn Virginia (the “Denbury Merger Proposal”), and
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2.
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to consider and vote on The
Company’s proposal to approve, by a non-binding advisory vote, certain compensation arrangements that may be paid or become payable to Penn Virginia’s named executive officers in connection with the mergers contemplated by the Merger
Agreement (the “Non-Binding Compensation Advisory Proposal”).
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1.
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to vote AGAINST
the Merger Agreement (the “Denbury Merger Proposal”), and
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2.
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to vote AGAINST
the non-binding advisory proposal to approve certain compensation that may be paid or become payable to Penn Virginia’s named executive officers that is based on or otherwise related to the Denbury Merger (the “Non-Binding Compensation
Advisory Proposal”).
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·
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If you are a “registered stockholder”, please sign and date the enclosed [GOLD] proxy card and return it to Mangrove, c/o Saratoga Proxy, in the enclosed postage-paid envelope today.
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·
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If you own shares in a brokerage account or through a bank, you are considered a “beneficial stockholder”, and
the Mangrove proxy materials, together with a voting instruction form (VIF), are being forwarded to you by your broker or bank. As a “beneficial owner”, you must instruct your broker, trustee or other representative on how to vote your
shares. Your broker cannot vote your shares on your behalf without receiving instructions from you.
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·
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Depending upon your broker or custodian’s voting policy, you may be able to vote either by toll-free telephone
or by using the Internet. Please refer to the enclosed voting form for instructions on how to vote electronically. You may also vote by signing, dating and returning the enclosed voting form in the pre-paid envelope provided to you.
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·
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Please do not sign
or return any [WHITE] proxy card you may receive from the Company. If you have already submitted a [WHITE] proxy card, you have every right to change your vote and we encourage you to do so. Please use the [GOLD] proxy card to vote by Internet or telephone or simply sign, date and return the [GOLD] proxy card. Only your latest dated proxy will be counted.
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·
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On October 29, 2018, Mangrove had calls with (i) David Geenberg, Co-Chairman of the Board of Directors of Penn
Virginia (the “Board”) and (ii) members of senior management of Penn Virginia to express its displeasure with the proposed Denbury Merger. Since October 29, 2018, Mangrove has continued to communicate its ongoing displeasure to Mr.
Geenberg.
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·
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On October 30, 2018, Mangrove filed an amendment to its Schedule 13D disclosing that: “Mangrove Partners is
evaluating Denbury Resources Inc.’s proposed acquisition of Penn Virginia as well as the market's reaction following the announcement of the transaction. While a sale of the company could be attractive for Penn Virginia's shareholders, we
believe that a control transaction should include the payment of a sustainable premium to shareholders of the target company. We also believe that Penn Virginia’s standalone prospects are currently undervalued in the marketplace and note
the Company’s strong operational performance, highly economic well results, significant cash flow, and guidance for 40%-60% production growth in 2019.”
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·
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On October 31, 2018, Mangrove had a call with members of Denbury’s senior management. During this call
Mangrove communicated that it was not interested in owning Denbury stock and would not support the proposed merger unless the price of Denbury’s stock was significantly higher.
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·
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On November 8, 2018, following the Company’s third quarter earnings release, Mangrove had a call with members
of Penn Virginia’s senior management and reiterated its belief that there was no merit to the proposed Denbury Merger and that the transaction should be terminated by mutual agreement of the companies.
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·
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On November 9, 2018, Brian Steck, Partner and Senior Analyst of Mangrove Partners, called Mr. Geenberg and
reiterated Mangrove’s publicly stated belief that the Denbury Merger was not in the best interest of Penn Virginia’s shareholders and proposed a group lunch meeting to discuss further.
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·
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On November 13, 2018, Mangrove attended a group lunch meeting for investors with members of Penn Virginia and
Denbury’s senior management and Guggenheim Partners, financial advisors to Denbury, to discuss the Denbury Merger.
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·
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Also on November 13, 2018, Mangrove attended a meeting with Mr. Geenberg and with members of Penn Virginia and
Denbury’s senior management to discuss the Denbury Merger. Mangrove’s comments during this meeting are described below in the amendment to its Schedule 13D filed on November 14, 2018.
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·
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On November 14, 2018, Mangrove filed an amendment to its Schedule 13D disclosing that: “On November 13, 2018,
representatives from Mangrove Partners met with senior management from both Denbury Resources Inc. and [Penn Virginia]. During this meeting, Mangrove shared its belief that while [Penn Virginia] is a compelling standalone investment,
Denbury Resources and [Penn Virginia], as a combined entity, is not of interest to Mangrove Partners. Mangrove also stated its belief that it is not alone in disliking this transaction, as other shareholders of the Issuer have reached out
to Mangrove to express their dissatisfaction. Furthermore, Mangrove notes that Denbury shareholders appear to have expressed unhappiness with the deal by driving Denbury's shares down over 40% in the 12 trading days since its
announcement. Mangrove believes that the market's reaction goes well beyond the typical arbitrage pressures following the announcement of a stock-for-stock transaction and reflects a rebuke of the transaction itself. Mangrove Partners
informed the management teams that it intends to vote against the proposed transaction. Mangrove also stated that it is planning to solicit proxies against the transaction, has hired SEC counsel, and is currently interviewing proxy
solicitors.”
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·
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On November 20, 2018, Mangrove called Mr. Geenberg to inform him and the Company that Mangrove had hired legal
counsel and a proxy solicitor, and is moving forward with its plans to solicit against the Denbury Merger. Mangrove reiterated its view that a mutually agreed termination of the transaction would be in the benefit of both companies.
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·
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On November 26, 2018, Mangrove had a call with Mr. Geenberg, Daren G. Holderness, a member of the Board, and
John A. Brooks, Penn Virginia’s Chief Executive Officer. Mangrove’s comments during the call are described below in the amendment to its Schedule 13D filed on November 28, 2018.
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·
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On November 28, 2018, Mangrove filed an amendment to its Schedule 13D disclosing that: “On November 26, 2018,
representatives from Mangrove Partners spoke with the Co-Chairman of the Board of Directors of the Issuer and its CEO. During this call, Mangrove called on the Issuer to work with Denbury Resources, Inc. to terminate the proposed
transaction. Should the Issuer and Denbury fail to agree to a mutual termination, Mangrove intends to vote against the transaction and to file its own proxy statement to solicit votes against the proposed deal. As part of its preparation,
Mangrove has hired Saratoga Proxy Consulting LLC and Kleinberg, Kaplan, Wolff & Cohen, P.C. to provide proxy and legal services related to its intended solicitation. Mangrove has also moved all of its stock to a fully-paid position in
order to secure its right to vote all of its shares once Penn Virginia has set a record date. On November 27, 2018, Mangrove delivered a demand letter to the Issuer requesting that the Issuer turn over copies of its shareholder records in
order to facilitate Mangrove's communications with Penn Virginia's shareholders.”
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·
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On December 3, 2018, Mangrove had a call with Messrs. Kendall and John P. Dielwart, Chairman of Denbury’s
Board of Directors. During this meeting Mangrove stated its belief that the market has clearly rejected the Denbury Merger and that Denbury’s efforts to build support for the transaction had failed. With no evidence of support from Penn
Virginia’s shareholders, Mangrove expressed its belief that it was time for Denbury to abandon the transaction and thus spare its shareholders unnecessary expense and distraction.
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·
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On December 7, 2018, Mr. August called Mr. Geenberg to reiterate again Mangrove’s displeasure with the Denbury
Merger and its intent to solicit against the proposed transaction.
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·
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On December 20, 2018, Messrs. August and Steck had a call with Messrs. Geenberg and Holderness to clarify the
nomination period for nominees to Penn Virginia’s Board. These questions were subsequently addressed in subsequent conversations between Mangrove’s outside counsel and Katie Ryan, Penn Virginia’s internal counsel, and later with Penn
Virginia’s outside counsel.
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1.
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Mangrove believes that the
proposed merger lacks industrial logic. Penn Virginia and Denbury pursue different means of oil production in different basins. As such, there is little overlap in the skills required to run these distinct businesses and no
geographic overlap between them. As a result, the transaction does little to improve the operating or corporate cost structures of
the combined business.
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2.
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Mangrove believes that the
proposed merger lacks financial logic. Mangrove believes that the transaction is dilutive to Penn Virginia’s valuation and growth rate, and believes that the combined entity will have a higher cost structure and weaker balance
sheet than Penn Virginia on a stand-alone basis.
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3.
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Mangrove believes that Denbury’s
financial leverage represents and unacceptable risk for Penn Virginia Shareholders. Mangrove believes that Denbury, with its high cost structure and $2.8 billion of debt, may become insolvent should lower oil prices persist.
Mangrove believes this is an ongoing investor concern that is reflected in the [17.24%]1 yield to worst on Denbury’s 5.500% Senior Notes due 2022.
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4.
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Mangrove believes that the
shortcomings of the proposed merger are both obvious and were immediately recognized by other market participants. On the first trading day following the announcement, the common stock of Denbury Resources closed down 24% and
underperformed the S&P Oil & Gas Exploration and Production Select Industry Index by over 20%. In the time since then, the underperformance of Denbury’s common stock has grown to nearly [40%].2
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5.
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Rather than being paid a
significant premium to accept these risks, the proposed merger effectively asks Penn Virginia shareholders to accept a discount to the current market value of Penn Virginia Shares. Penn Virginia shares have closed at a premium
to the terms of the proposed merger on all but [4] trading days since the transaction was announced and have averaged a [9%] premium over the most recent 20 trading days.3
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Nature of Transaction
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Purchase/Sale
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Number of Shares Purchased/(Sold)
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Date of Purchase/Sale
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Regular Trade
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Sale
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(300.00)
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1/10/2017
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Regular Trade
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Sale
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(2,800.00)
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1/11/2017
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Regular Trade
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Sale
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(319.00)
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1/11/2017
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Regular Trade
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Purchase
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500.00
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1/27/2017
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Regular Trade
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Purchase
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2,000.00
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1/31/2017
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Regular Trade
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Purchase
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1,000.00
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2/7/2017
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Regular Trade
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Purchase
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300.00
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2/7/2017
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Regular Trade
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Purchase
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5,000.00
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3/10/2017
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Regular Trade
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Purchase
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1,000.00
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3/22/2017
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Regular Trade
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Purchase
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16,071.00
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3/31/2017
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Free Reorganization Open*
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Purchase
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2,245.00
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4/26/2017
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Free Reorganization Open*
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Purchase
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6,310.00
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4/26/2017
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Regular Trade
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Purchase
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175,000.00
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4/27/2017
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Regular Trade
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Purchase
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2,835.00
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4/27/2017
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Regular Trade
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Purchase
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10,000.00
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5/11/2017
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Free Reorganization Open*
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Purchase
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959.00
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10/26/2017
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Free Reorganization Open*
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Purchase
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18,562.00
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10/26/2017
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Free Reorganization Open*
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Purchase
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4,361.00
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10/26/2017
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Free Reorganization Open*
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Purchase
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2,584.00
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10/26/2017
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Regular Trade
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Sale
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(25,000.00)
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6/4/2018
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Regular Trade
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Purchase
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25,000.00
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6/5/2018
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Regular Trade
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Purchase
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33,547.00
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11/19/2018
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Regular Trade
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Purchase
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77,207.00
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11/20/2018
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Regular Trade
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Purchase
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27,500.00
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11/26/2018
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Regular Trade
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Purchase
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40,000.00
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11/27/2018
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Regular Trade
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Purchase
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52,500.00
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11/28/2018
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Free Reorganization Open*
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Purchase
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1,336.00
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12/13/2018
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Free Reorganization Open*
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Purchase
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3,758.00
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12/13/2018
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Regular Trade
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Purchase
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17,600.00
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12/28/2018
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Regular Trade
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Purchase
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7,691.00
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12/31/2018
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Regular Trade
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Purchase
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1,000.00
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1/2/2019
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Regular Trade
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Purchase
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30,000.00
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1/3/2019
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Nature of Transaction
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Purchase/Sale
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Number of Shares Purchased/(Sold)
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Date of Purchase/Sale
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Regular Trade
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Purchase
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79,700.00
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11/9/2017
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Regular Trade
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Purchase
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38,587.00
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11/10/2017
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Regular Trade
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Purchase
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100,000.00
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12/6/2017
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Regular Trade
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Purchase
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86,614.00
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12/8/2017
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Regular Trade
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Purchase
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15,714.00
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2/8/2018
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Regular Trade
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Purchase
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47,812.00
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2/9/2018
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Regular Trade
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Purchase
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24,199.00
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2/12/2018
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Regular Trade
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Purchase
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14,233.00
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2/13/2018
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Regular Trade
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Purchase
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200.00
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2/14/2018
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Regular Trade
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Purchase
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21,509.00
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2/15/2018
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Regular Trade
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Purchase
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5,415.00
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2/20/2018
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Regular Trade
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Purchase
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3,514.00
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2/21/2018
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Regular Trade
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Purchase
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26,136.00
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2/22/2018
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Regular Trade
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Purchase
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28,166.00
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2/28/2018
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Regular Trade
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Purchase
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1,900.00
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3/2/2018
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Regular Trade
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Purchase
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3,545.00
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3/5/2018
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Regular Trade
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Purchase
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122,214.00
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3/6/2018
|
Regular Trade
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Purchase
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15,525.00
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3/7/2018
|
Regular Trade
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Purchase
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14,479.00
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3/8/2018
|
Regular Trade
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Purchase
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1,514.00
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3/9/2018
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Regular Trade
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Purchase
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10,522.00
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3/12/2018
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Regular Trade
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Purchase
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23,136.00
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3/13/2018
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Regular Trade
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Purchase
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20,133.00
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3/14/2018
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Regular Trade
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Purchase
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39,732.00
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3/15/2018
|
Regular Trade
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Purchase
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100.00
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3/16/2018
|
Regular Trade
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Purchase
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40,805.00
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4/2/2018
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Regular Trade
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Sale
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(15,071.00)
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6/1/2018
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Regular Trade
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Sale
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(25,000.00)
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6/5/2018
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Regular Trade
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Sale
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(3,281.00)
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6/5/2018
|
Regular Trade
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Sale
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(25,000.00)
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6/5/2018
|
Regular Trade
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Sale
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(200.00)
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6/6/2018
|
Regular Trade
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Sale
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(39,771.00)
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6/8/2018
|
Regular Trade
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Sale
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(38,956.00)
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6/11/2018
|
Regular Trade
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Sale
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(23,777.00)
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6/12/2018
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Regular Trade
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Sale
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(26,000.00)
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6/13/2018
|
Regular Trade
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Sale
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(19,201.00)
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6/14/2018
|
Regular Trade
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Sale
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(100.00)
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6/15/2018
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Regular Trade
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Sale
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(103,386.00)
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6/18/2018
|
Regular Trade
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Sale
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(69,885.00)
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6/19/2018
|
Regular Trade
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Sale
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(98,340.00)
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6/22/2018
|
Regular Trade
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Sale
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(53,258.00)
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6/25/2018
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Regular Trade
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Purchase
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12,798.00
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8/8/2018
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Regular Trade
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Sell
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(27,500.00)
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11/26/2018
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Regular Trade
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Sale
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(40,000.00)
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11/27/2018
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Regular Trade
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Sale
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(52,500.00)
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11/28/2018
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Regular Trade
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Sale
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(30,000.00)
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1/3/2019
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·
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SIGNING the enclosed [GOLD] proxy card
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·
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DATING the enclosed [GOLD] proxy card, and
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·
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MAILING the enclosed [GOLD] proxy card TODAY in the envelope provided (no postage is required if mailed in the United States).
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1.
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The Company’s proposal to approve the Agreement and Plan of Merger, dated as of October 28, 2018 (the “Merger Agreement”), by and
among Denbury Resources Inc., Dragon Merger Sub Inc., DR Sub LLC and Penn Virginia Corporation (“Penn Virginia”).
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|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
|
2.
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The Company’s proposal to approve, by a non-binding advisory vote, certain compensation arrangements that may be paid or become
payable to Penn Virginia’s named executive officers in connection with the mergers contemplated by the Merger Agreement.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[ ]
|
[ ]
|
[ ]
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