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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12
PENN VIRGINIA CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
 
 
 
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
 
 
 
(1)
Title of each class of securities to which transaction applies:
 
 
 
 
(2)
Aggregate number of securities to which transaction applies:
 
 
 
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
 
 
 
(4)
Proposed maximum aggregate value of transaction:
 
 
 
 
(5)
Total fee paid:
 
 
 
 
 
 
Fee paid previously with preliminary materials.
 
 
 
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)
Amount Previously Paid:
 
 
 
 
(2)
Form, Schedule or Registration Statement No.:
 
 
 
 
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Filing Party:
 
 
 
 
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Date Filed:
 
 
 

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PENN VIRGINIA CORPORATION
16285 Park Ten Place
Suite 500
Houston, Texas 77084
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Our Shareholders:
Notice is hereby given that the Special Meeting of Shareholders of Penn Virginia Corporation (the “Company”) will be held virtually, conducted via live audio webcast on January 13, 2021, at 10:00 a.m., Central Time (the “Special Meeting”). You will be able to attend the Special Meeting online and submit questions during the Special Meeting by visiting www.virtualshareholdermeeting.com/PVAC2021SM. You will also be able to vote your shares electronically at the Special Meeting. We believe that, given COVID-19, a virtual shareholder meeting provides greater access to those who may want to attend the Special Meeting.
The Special Meeting is being held to consider and act on the following matters:
1.
To consider and vote upon a proposal to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the potential issuance of up to 22,597,757 shares of our common stock, par value $0.01 per share (the “Common Stock”), upon the redemption or exchange of up to 225,977.57 shares of Series A Preferred Stock, par value $0.01 per share, of the Company (which Series A Preferred Stock will be a non-economic voting interest) (“Series A Preferred Stock”), together with up to 22,597,757 common units representing limited partner interests of PV Energy Holdings, L.P., a Delaware limited partnership and a newly formed subsidiary of the Company (the “Partnership”), proposed to be issued to affiliates of Juniper Capital Advisors, L.P. (“Juniper Capital”) in exchange for a cash contribution of $150,000,000 and certain oil and gas assets pursuant to the terms, and subject to the conditions, set forth in (i) that certain Contribution Agreement, dated as of November 2, 2020 (the “Contribution Agreement”), by and among the Company, the Partnership and JSTX Holdings, LLC, an affiliate of Juniper Capital, and (ii) that certain Contribution Agreement, dated as of November 2, 2020 (the “Asset Agreement”), by and among the Company, the Partnership and Rocky Creek Resources, LLC, an affiliate of Juniper Capital, which proposal is conditioned upon the approval of the Change of Control Proposal (as defined below) (the “Issuance Proposal”).
2.
To consider and vote upon a proposal to approve, for purposes of complying with Nasdaq Listing Rule 5635(b), the change of control under Nasdaq Listing Rule 5635(b) that would result from the proposed issuance to affiliates of Juniper Capital of up to 225,977.57 shares of Series A Preferred Stock pursuant to the transactions contemplated by the Contribution Agreement and the Asset Agreement, which proposal is conditioned upon the approval of the Issuance Proposal (the “Change of Control Proposal” and, together with the Issuance Proposal, the “Nasdaq Proposals”).
3.
To consider and vote upon a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Nasdaq Proposals (the “Adjournment Proposal” and, together with the Nasdaq Proposals, the “Proposals”).
Only shareholders of record at the close of business on December 8, 2020, the record date for the Special Meeting, are entitled to notice of, and to vote at, the Special Meeting or any adjournment, postponement or continuation thereof. A majority in voting power of the outstanding shares of Common Stock entitled to vote thereat must be present online or represented by proxy at the Special Meeting to constitute a quorum. Therefore, all shareholders are urged to attend the Special Meeting or to be represented by proxy.
Your attention is directed to the proxy statement accompanying this Notice (including the annexes thereto and the other documents referred to therein) for a more complete description of each of the Proposals. We encourage you to read this proxy statement carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Okapi Partners, LLC, at (844) 343-2623 (banks and brokers call collect at (212) 297-0720).

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Whether or not you plan to virtually attend the Special Meeting, please vote your shares as soon as possible in one of three ways: by Internet, telephone or mail. If you later find that you will be virtually present at the Special Meeting and wish to vote electronically or for any other reason desire to revoke your proxy, you may revoke your proxy at any time before the voting at the Special Meeting.
 
By Order of the Board of Directors
 
 
 

 
Katherine Ryan
 
Corporate Secretary
Houston, Texas
 
December 8, 2020

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PENN VIRGINIA CORPORATION
PROXY STATEMENT
Special Meeting of Shareholders
To Be Held on January 13, 2021
INTRODUCTION
This proxy statement and the accompanying proxy card are being furnished to shareholders of Penn Virginia Corporation, which is referred to in this proxy statement as the “Company,” “Penn Virginia,” “we,” “us” or “our,” in connection with the solicitation by or on behalf of the Board of Directors of the Company, or the “Board,” of proxies to be voted at the Special Meeting of Shareholders (the “Special Meeting”), to be held at 10 a.m., Central Time, on January 13, 2021, and at any adjournment, postponement or continuation thereof.
At the Special Meeting, we are seeking shareholder approval: (i) for purposes of complying with Nasdaq Listing Rule 5635(a), of the potential issuance of up to 22,597,757 shares of our common stock, par value $0.01 per share (the “Common Stock”), upon the redemption or exchange of up to 225,977.57 shares of Series A Preferred Stock, par value $0.01 per share, of the Company (which Series A Preferred Stock will be a non-economic voting interest) (“Series A Preferred Stock”), together with up to 22,597,757 common units representing limited partner interests of PV Energy Holdings, L.P. (“Common Units”), a Delaware limited partnership and a newly formed subsidiary of the Company (the “Partnership”), proposed to be issued through private placements to affiliates of Juniper Capital Advisors, L.P. (“Juniper Capital” and, together with its affiliates, referred to herein as “Juniper”) in exchange for a cash contribution of $150,000,000 and certain oil and gas assets pursuant to the terms, and subject to the conditions, set forth in (A) that certain Contribution Agreement, dated as of November 2, 2020 (the “Contribution Agreement”), by and among the Company, the Partnership and JSTX Holdings, LLC, a Delaware limited liability company and an affiliate of Juniper Capital (“JSTX”), and (B) that certain Contribution Agreement, dated as of November 2, 2020 (the “Asset Agreement” and, together with the Contribution Agreement, the “Transaction Agreements”), by and among the Company, the Partnership and Rocky Creek Resources, LLC, a Delaware limited liability company and an affiliate of Juniper Capital (“Rocky Creek”), which proposal is conditioned upon the approval of the Change of Control Proposal (as defined below) (the “Issuance Proposal”); (ii) for purposes of complying with Nasdaq Listing Rule 5635(b), of the change of control under Nasdaq Listing Rule 5635(b) that would result from the proposed issuance to affiliates of Juniper Capital of shares of our Series A Preferred Stock pursuant to the transactions contemplated by the Contribution Agreement and the Asset Agreement, which proposal is conditioned upon the approval of the Issuance Proposal (the “Change of Control Proposal” and, together with the Issuance Proposal, the “Nasdaq Proposals”); and (iii) for the adjournment of the Special Meeting, if deemed necessary or appropriate (the “Adjournment Proposal” and, together with the Nasdaq Proposals, the “Proposals”).
This proxy statement provides extensive information regarding a series of interrelated transactions among us, Juniper, and certain other parties identified herein, as contemplated by the Transaction Agreements (the “Transactions”), of which the private placements of Series A Preferred Stock pursuant to each of the Contribution Agreement and the Asset Agreement are integral parts and must be understood in the context of the entire series of transactions. However, we are not seeking shareholder approval for any portion of the Transactions other than the Nasdaq Proposals, as required under and for the purposes of complying with Nasdaq Listing Rules 5635(a) and 5635(b). As more fully discussed in this proxy statement, our Board believes that the Transactions will benefit the Company and its shareholders by improving our balance sheet and liquidity position, extending our second-lien term loan maturity through the Second Lien Credit Agreement Amendment (as defined herein) and increasing our cash flow and drilling inventory with complementary bolt-on acreage that enhances our asset base. It is important to note that each of the Issuance Proposal and the Change of Control Proposal are conditioned on the approval of the other, and both of the Nasdaq Proposals must be approved or we will not be able to consummate the Transactions. Therefore, if you vote against either of the Nasdaq Proposals, you are, in effect, voting against both proposals and the Transactions as a whole.
The Special Meeting will be a virtual meeting of shareholders, conducted via live audio webcast. You will be able to attend the Special Meeting online and submit questions during the Special Meeting by visiting www.virtualshareholdermeeting.com/PVAC2021SM. You will also be able to vote your shares electronically at the Special Meeting.
This proxy statement is dated December 8, 2020 and is first being mailed to shareholders of the Company on or about December 11, 2020. Our principal executive offices are located at 16285 Park Ten Place, Suite 500, Houston, Texas 77084.
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SUMMARY TERM SHEET
This summary term sheet, together with the sections entitled “Questions and Answers About the Proposals” and “Summary of the Proxy Statement,” summarizes certain information contained in this proxy statement, but does not contain all of the information that is important to you. You should read carefully this entire proxy statement, including the attached Annexes, and the other documents referred to herein, for a more complete understanding of the matters to be considered at the Special Meeting. In addition, for definitions used commonly throughout this proxy statement, including this summary term sheet, please see the section entitled “Frequently Used Terms.”
Penn Virginia Corporation, a Virginia corporation which we refer to as “we,” “us,” “our,” “Penn Virginia” or the “Company,” was incorporated in Virginia in January 1882. Based out of Houston, Texas, the Company is a pure-play independent oil and gas company engaged in the development and production of oil, NGLs, and natural gas, with operations in the Eagle Ford shale in south Texas. For more information about the Company and its affiliates that are party to the Transactions, please see the section entitled “Information About the Company Parties.
As of December 8, 2020, the record date for the Special Meeting, there were 15,200,435 shares of Common Stock issued and outstanding, and there were no shares of Company preferred stock issued and outstanding.
For information about Juniper and its affiliates that are party to the Transactions, including JSTX and Rocky Creek, please see the sections entitled “Information About the Juniper Parties and “Rocky Creek Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
On November 2, 2020, the Company entered into the following agreements with the other parties thereto: (i) the Contribution Agreement, (ii) the Asset Agreement, (iii) Amendment No. 1 to Credit Agreement (the “Second Lien Credit Agreement Amendment”) which provides for certain amendments to the Credit Agreement, dated as of September 29, 2017 (the “Second Lien Credit Agreement”), among the Company, Penn Virginia Holding Corp., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“Holdings”), as borrower, the lenders from time to time party thereto and Jefferies Finance LLC, as administrative agent and collateral agent, and (iv) a Limited Guarantee (the “Limited Guarantee”), executed by Juniper Capital III, L.P., a Delaware limited partnership and the parent of JSTX and an affiliate of Juniper Capital (the “Juniper Guarantor”), in favor of the Company. For more information about the transactions contemplated by these agreements, please see the section entitled “The Transactions.
On the terms and conditions contained in the Contribution Agreement, (i) prior to the closing of the transactions contemplated thereby (the “Equity Transaction”), the Company will cause all of its direct and indirect corporate subsidiaries, including Holdings, to become limited liability companies which will be disregarded for U.S. federal income tax purposes (each such conversion, a “Conversion” and collectively, the “Conversions”), (ii) prior to or concurrently with the consummation of the Equity Transaction, the Company will contribute to the Partnership all of its equity interests in the resulting entity following the Conversion of Holdings in exchange for a number of Common Units equal to the number of shares of Common Stock outstanding as of the Closing Date and (iii) JSTX will contribute to the Partnership, as a capital contribution, $150,000,000 in cash (the “Capital Contribution”) in exchange for 17,142,857 Common Units. In addition, the Company will issue to JSTX 171,428.57 shares of Series A Preferred Stock, at a price per share equal to the par value thereof. For more information about the Contribution Agreement, please see the section entitled “The Transactions—Contribution Agreement.
On the terms and conditions contained in the Asset Agreement, Rocky Creek will contribute to the Partnership (or its designated affiliate) all of Rocky Creek’s right, title and interest to certain of its oil and gas interests and associated assets (including seismic data) located within Lavaca County, Texas and Fayette County, Texas, except for royalty and overriding royalty interests owned by a subsidiary of Rocky Creek and a customary list of exclusions (together, the “Contributed Assets”), and the Partnership (or its designated affiliate) will assume certain liabilities from Rocky Creek in exchange for 4,959,000 Common Units valued at $7.74 per Common Unit, or $38,382,660 in the aggregate (the “Purchase Price”), and 49,590 shares of Series A Preferred Stock at a price per share equal to the par value thereof. The number of Common Units and shares of Series A Preferred Stock to be issued to Rocky Creek and the related value ascribed to the Contributed Assets are subject to certain customary adjustments set forth in the Asset Agreement, provided that the consideration owed pursuant to any increase in valuation of the Contributed Assets in excess of 10% of the Purchase Price shall be deliverable in cash, and no more than an additional 495,900 Common Units, together with an additional 4,959 shares of Series A Preferred Stock, shall be issued pursuant to such adjustments. For more information about the Asset Agreement, please see the section entitled “The Transactions—Asset Agreement.
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On the terms and conditions contained in the Second Lien Credit Agreement Amendment, including the prepayment of $50,000,000 of outstanding advances under the Second Lien Credit Agreement and the prepayment of $100,000,000 of outstanding loans under the Credit Agreement, dated as of September 12, 2016 (the “RBL”), by and among Holdings, as borrower, the Company, the subsidiary guarantors party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (less certain costs, fees and expenses related to the Transactions, the Second Lien Credit Agreement and the RBL), the Second Lien Credit Agreement Amendment provides that, in addition to other changes described therein, the maturity date of the Second Lien Credit Agreement will be automatically extended to September 29, 2024. For more information about the Second Lien Credit Agreement Amendment, please see the section entitled “The Transactions—Second Lien Credit Agreement Amendment.
On the terms and conditions contained in the Limited Guarantee, Juniper Guarantor has agreed to guarantee JSTX’s obligations contained in the Contribution Agreement, including, among other things, the Capital Contribution. For more information about the Limited Guarantee, please see the section entitled “The Transactions—Limited Guarantee.
It is anticipated that, upon completion of the Transactions: (i) the Company’s current shareholders will own approximately 41% of the Company and (ii) Juniper, through JSTX and Rocky Creek, will own approximately 59% of the Company, in each case subject to the adjustments set forth in the Asset Agreement. Please see the sections entitled “The Transactions—Contribution Agreement” and “The Transactions—Asset Agreement.
Our Board considered various factors in determining whether to approve the Transaction Agreements and the Transactions contemplated thereby, including the potential to improve our balance sheet and liquidity position, extend our second-lien term loan maturity through the Second Lien Credit Agreement Amendment and increase our cash flow and drilling inventory with complementary bolt-on acreage that enhances our asset base. For more information about the Board’s reasons for approving the Transactions, see the section entitled “The Transactions—Reasons for the Transactions; Recommendation of the Board.”
In considering the recommendation of our Board to vote for the Proposals presented at the Special Meeting, including the Nasdaq Proposals, you should be aware that aside from their interests as shareholders, certain members of our management and our Board have interests in the Transactions that are different from, or in addition to, the interests of our shareholders generally. Our Board was aware of and considered these interests, among other matters, in evaluating the Transactions and Transaction Agreements and in recommending to our shareholders that they vote in favor of the Proposals presented at the Special Meeting, including the Nasdaq Proposals. Shareholders should take these interests into account in deciding whether to approve the Proposals presented at the Special Meeting, including the Nasdaq Proposals. These interests include, among other things, that unless waived by the applicable members of our management, the expected issuance of approximately 59% of the voting power of our capital stock in connection with the completion of the Transactions would constitute a “Qualified Liquidity Event” under the Company’s 2017 Special Severance Plan (as amended and restated as of August 17, 2020) (the “Severance Plan”) and certain equity awards granted to certain members of our management team prior to 2019 and a “Change in Control” under certain equity awards granted to certain members of our management team in 2019 and 2020. As a result, such management members may receive benefits that exceed what they would have otherwise been entitled to absent the issuance of the Purchased Securities (as defined herein) at the completion of the Transactions. For more information about these interests, please see the section entitled “The Transactions—Interests of Certain Persons in the Transactions.”
At the Special Meeting, the shareholders of the Company will be asked to consider and vote upon (i) for purposes of complying with Nasdaq Listing Rule 5635(a), the Issuance Proposal, which is conditioned upon the approval of the Change of Control Proposal; (ii) for purposes of complying with Nasdaq Listing Rule 5635(b), the Change of Control Proposal, which is conditioned upon the approval of the Issuance Proposal; and (iii) the Adjournment Proposal, which is not conditioned on the approval of any other proposal set forth in this proxy statement. Please see the sections entitled “Proposal No. 1—The Issuance Proposal,” “Proposal No. 2—The Change of Control Proposal” and “Proposal No. 3—The Adjournment Proposal.”
Unless waived by the parties to the Transaction Agreements, and subject to applicable law, the closings of the Equity Transaction and the Asset Transaction (as defined herein) are subject to a number of conditions set forth in the Contribution Agreement and the Asset Agreement, respectively, including, among others, entry into the RBL Amendment (as defined herein) and receipt of shareholder approval contemplated by this proxy statement.
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Additionally, the closing of the Equity Transaction is conditioned upon the concurrent closing of the Asset Transaction, and vice versa. For more information about the closing conditions to the Transactions, please see the sections entitled “The Transactions—Contribution Agreement—Closing Conditions,” and “The Transactions—Asset Agreement—Closing Conditions.
The effectiveness of the amendments contemplated by the Second Lien Credit Agreement Amendment is subject to the consummation of the Transactions and the satisfaction of certain other conditions precedent set forth therein, including, among others, the prepayment of $50,000,000 of outstanding advances under the Second Lien Credit Agreement and the prepayment of $100,000,000 of outstanding loans under the RBL (less certain costs, fees and expenses related to the Transactions, the Second Lien Credit Agreement and the RBL), which prepayments are expected to be made with the proceeds from the Equity Transaction. For more information about the Second Lien Credit Agreement Amendment, please see the section entitled “The Transactions—Second Lien Credit Agreement Amendment.
The Transaction Agreements may be terminated at any time prior to the consummation of the Transactions upon agreement of the parties thereto, or by the Company or the Juniper affiliate party thereto in specified circumstances. For more information about the termination rights under the Contribution Agreement and the Asset Agreement, please see the sections entitled “The Transactions—Contribution Agreement—Termination,” and “The Transactions—Asset Agreement—Termination.
The proposed Transactions involve numerous risks. For more information about these risks, please see the section entitled “Risk Factors” beginning on page 39 of this proxy statement.
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FREQUENTLY USED TERMS
Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “Penn Virginia” refer to Penn Virginia Corporation, and the term “combined Company” refers to the Company following the consummation of the Transactions. Unless otherwise stated, any references to the ownership of voting power of the combined Company or of economic interests in the Partnership (following the consummation of the Transactions) assumes (i) 15,200,435 shares of Common Stock outstanding as of the Closing Date and (ii) no adjustments to the number of Common Units and shares of Series A Preferred Stock to be issued pursuant to the Asset Agreement.
In this proxy statement:
Articles of Amendment” means the Articles of Amendment establishing the Series A Preferred Stock and containing the powers, designations, preferences and rights of the Series A Preferred Stock, to be filed by the Company with the State Corporation Commission of the Commonwealth of Virginia in connection with the Closing, substantially in the form attached hereto as Annex D. The Articles of Amendment are referred to in the Transaction Documents as the “Certificate of Designation.”
Asset Agreement” means that certain Contribution Agreement, dated as of November 2, 2020, by and among the Company, the Partnership and Rocky Creek.
Asset Transaction” means, collectively, the transactions contemplated by the Asset Agreement.
A&R Partnership Agreement” means that certain Amended and Restated Agreement of Limited Partnership of the Partnership to be entered into at the Closing by the General Partner, as general partner, and the Company, JSTX and Rocky Creek, as limited partners, substantially in the form attached hereto as Annex C.
Board” or “Board of Directors” means the board of directors of the Company.
Capital Contribution” means the contribution of $150,000,000 in cash to the Partnership by JSTX pursuant to the Contribution Agreement.
Closing” means the consummation of the Equity Transaction and the Asset Transaction and the other Transactions contemplated thereby to be consummated contemporaneously therewith on the terms and subject to the conditions contained in the Transaction Agreements.
Closing Date” means the date of the Closing.
Code” means the Internal Revenue Code of 1986, as amended.
Common Stock” means the common stock, par value $0.01 per share, of the Company.
Common Units” means the units representing limited partner interests in the Partnership.
Company Alternative Proposal” means any proposal or offer (whether or not in writing) made by any person other than JSTX or its affiliates, with respect to any (i) merger, amalgamation, consolidation, share exchange, other business combination, recapitalization or similar transaction involving the Company, (ii) sale, lease, contribution or other disposition, directly or indirectly (including by way of merger, amalgamation, consolidation, share exchange, other business combination, recapitalization, partnership, joint venture, sale of capital stock of, or other equity interests in, the Company or any of its subsidiaries or otherwise), of any business or assets of the Company or any of its subsidiaries representing 20% or more of the consolidated revenues, consolidated net income or consolidated assets of the Company or securities convertible into or exchangeable for or representing 20% or more of the total outstanding voting power of the Company, (iii) transaction in which any person (or the stockholders of any person) shall acquire, directly or indirectly, beneficial ownership, or the right to acquire beneficial ownership, or formation of any group which beneficially owns or has the right to acquire beneficial ownership of, 20% or more of the total outstanding voting power of the Company or (iv) combination of the foregoing (in each case, other than the transactions contemplated by the Contribution Agreement).
Company Credit Facilities” means, collectively, the Second Lien Credit Agreement and the RBL, all guaranties and security documents related thereto and all hedges and letters of credit allowed to be secured by the collateral securing the Second Lien Credit Agreement and the RBL.
Company Parties” means, collectively, the Company, the Partnership, the General Partner and Holdings.
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Contributed Assets” means all of Rocky Creek’s right, title and interest to certain of its oil and gas interests and associated assets (including seismic data) located within Lavaca County, Texas and Fayette County, Texas, except for royalty and overriding royalty interests owned by a subsidiary of Rocky Creek and a customary list of exclusions, to be contributed to the Partnership (or its designated affiliate) pursuant to the Asset Agreement.
Contribution Agreement” means that certain Contribution Agreement, dated as of November 2, 2020, by and among the Company, the Partnership and JSTX.
Conversions” means, collectively, the conversion of each of the Company’s corporate subsidiaries, including Holdings, into limited liability companies which will be disregarded for U.S. federal income tax purposes. Each of the Conversions is referred to in this proxy statement as a “Conversion.”
Second Lien Credit Agreement” means that certain Credit Agreement, dated as of September 29, 2017, among the Company, Holdings, as borrower, the lenders from time to time party thereto and Jefferies Finance LLC, as administrative agent and collateral agent (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time).
Equity Transaction” means, collectively, the transactions contemplated by the Contribution Agreement.
Evercore” means Evercore Group L.L.C., financial advisor to the Company.
Exchange Act” means the Securities Exchange Act of 1934, as amended.
General Partner” means PV Energy Holdings GP, LLC, a Delaware limited liability company, the general partner of the Partnership and a direct, wholly-owned subsidiary of the Company.
Holdings” means Penn Virginia Holding Corp., a Delaware corporation and a direct, wholly-owned subsidiary of the Company.
HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Investor Agreement” means that certain Investor and Registration Rights Agreement to be entered into at the Closing by the Company, JSTX and Rocky Creek, substantially in the form attached hereto as Annex E.
Investor Directors” means the directors from time to time appointed to the Board pursuant to Juniper’s designation rights under the Investor Agreement and the Articles of Amendment.
JSTX” means JSTX Holdings, LLC, a Delaware limited liability company and an affiliate of Juniper Capital.
Juniper” means Juniper Capital, together with its affiliates, including JSTX and Rocky Creek.
Juniper Capital” means Juniper Capital Advisors, L.P.
Juniper Guarantor” means Juniper Capital III, L.P., a Delaware limited partnership, the parent of JSTX and an affiliate of Juniper Capital.
Limited Guarantee” means the Limited Guarantee, dated as of November 2, 2020, executed by Juniper Guarantor in favor of the Company.
MBOE” means one thousand barrels of oil equivalent.
MMBOE” means one million barrels of oil equivalent.
Nasdaq” means the Nasdaq Global Select Market.
NGLs” means natural gas liquids. Natural gas liquids result from natural gas processing and crude oil refining and are used as petrochemical feedstocks, heating fuels and gasoline additives, among other applications.
Okapi Partners” means Okapi Partners LLC, proxy solicitor to the Company.
Outside Date” means 11:59 p.m. Eastern Time on May 2, 2021.
Partnership” means PV Energy Holdings, L.P., a Delaware limited partnership and a direct, wholly-owned subsidiary of the Company.
Purchase Price” means $38,382,660, subject to adjustment as set forth in the Asset Agreement, and is the value ascribed to the Contributed Assets.
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Purchased Preferred Stock” means the Series A Preferred Stock to be issued to JSTX pursuant to the Contribution Agreement and/or, as the context requires, the Series A Preferred Stock to be issued to Rocky Creek pursuant to the Asset Agreement.
Purchased Securities” means the Purchased Units and the Purchased Preferred Stock to be issued to JSTX pursuant to the Contribution Agreement and/or, as the context requires, the Purchased Units and the Purchased Preferred Stock to be issued to Rocky Creek pursuant to the Asset Agreement.
Purchased Units” means the Common Units to be issued to JSTX pursuant to the Contribution Agreement and/or, as the context requires, the Common Units to be issued to Rocky Creek pursuant to the Asset Agreement.
RBCCM” means RBC Capital Markets, LLC, financial advisor to the Company.
RBL” means that certain Credit Agreement, dated as of September 12, 2016, by and among Holdings, as borrower, the Company, the subsidiary guarantors party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time).
RBL Amendment” means the written consent to, and/or waivers of default or amendment of the RBL in connection with, the Transactions, which the Company has agreed to use its reasonable best efforts to negotiate and enter into with the lenders under the RBL.
Reorganization” means the reorganization of our organization into an “up-C” structure (which is intended to, among other things, result in the holders of Series A Preferred Stock having a voting interest in the Company that is commensurate with such holders’ economic interest in the Partnership), including the Conversions and the Company’s contribution to the Partnership of all of its equity interests in the resulting entity following the Conversion of Holdings in exchange for a number of Common Units equal to the number of shares of Common Stock outstanding as of the Closing Date.
Rocky Creek” means Rocky Creek Resources LLC, a Delaware limited liability company and an affiliate of Juniper Capital.
SEC” means the United States Securities and Exchange Commission.
Second Lien Credit Agreement Amendment” means that certain Amendment No. 1 to Credit Agreement, dated as of November 2, 2020, by and among the Company, Holdings, as borrower, the guarantors party thereto and the consenting lenders party thereto, which provides for certain amendments to the Second Lien Credit Agreement.
Securities Act” means the Securities Act of 1933, as amended.
Series A Preferred Stock” means the preferred stock, par value $0.01 per share, of the Company, to be designated as Series A Preferred Stock (which Series A Preferred Stock will be a non-economic voting interest), the powers, designations, preferences and rights of which will be contained in the Articles of Amendment.
Special Meeting” means the special meeting of the shareholders of the Company that is the subject of this proxy statement.
“Transactions” means the series of interrelated transactions among us, affiliates of Juniper Capital, and certain other parties identified herein, as contemplated by the Transaction Agreements.
Transaction Agreements” means, collectively, the Contribution Agreement and the Asset Agreement.
Transaction Documents” means, collectively, the Transaction Agreements, the Second Lien Credit Agreement Amendment, the Limited Guarantee, the Form of Investor Agreement, the Form of Articles of Amendment and the Form of A&R Partnership Agreement.
Truist Securities” means Truist Securities, Inc., financial advisor to the Company.
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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
The following questions and answers briefly address some commonly asked questions about the Proposals to be presented at the Special Meeting of shareholders of Penn Virginia Corporation. The following questions and answers do not include all the information that is important to the Company’s shareholders. We urge the Company’s shareholders to read carefully this entire proxy statement, including the annexes and other documents referred to herein.
Q:
Why am I receiving this proxy statement?
A:
The Board is providing these proxy materials to you in connection with our Special Meeting of shareholders, which will take place on January 13, 2021. Our shareholders are invited to virtually attend the Special Meeting and are entitled to and requested to vote on the Proposals described in this proxy statement.
This proxy statement, its annexes and the other documents referred to herein contain important information about the Proposals to be acted upon at the Special Meeting. You should read them carefully and in their entirety.
Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement, its annexes and the other documents referred to herein.
Q:
What is a proxy?
A:
It is your legal designation of another person to vote the stock you own in the manner you direct. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. The proxies also may be voted at any adjournments, postponements or continuations of the Special Meeting.
Q:
What is a proxy statement?
A:
It is a document that we give you when we are soliciting your vote pursuant to SEC regulations.
Q:
What is being voted on at the Special Meeting?
A:
Below are the Proposals on which the Company’s shareholders will vote at the Special Meeting.
Issuance Proposal - To approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the potential issuance of up to 22,597,757 shares of our Common Stock upon the redemption or exchange of the Purchased Securities proposed to be issued to affiliates of Juniper Capital pursuant to the Transactions, which proposal is conditioned upon the approval of the Change of Control Proposal.
Change of Control Proposal - To approve, for purposes of complying with Nasdaq Listing Rule 5635(b), the change of control under Nasdaq Listing Rule 5635(b) that would result from the proposed issuance to affiliates of Juniper Capital of up to 225,977.57 shares of our Series A Preferred Stock pursuant to the Transactions, which proposal is conditioned upon the approval of the Issuance Proposal.
Adjournment Proposal - To approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Nasdaq Proposals.
Q:
Are any of the Proposals conditioned on one another?
A:
Yes. The approval of the Issuance Proposal is conditioned on the approval of the Change of Control Proposal, and vice versa. Approval of the Adjournment Proposal is not conditioned on, or a condition to, any other Proposal.
Q:
What will happen if the Nasdaq Proposals are not approved at the Special Meeting?
A:
If the Company does not obtain shareholder approval of the Issuance Proposal and the Change of Control Proposal, the Company will be unable to consummate the Transactions, as shareholder approval of each such proposal is a non-waivable condition to closing the Transactions. In addition, as described above, approval of the Issuance Proposal is conditioned upon approval of the Change of Control proposal, and vice versa. Accordingly, the Company will be unable to consummate the Transactions unless our shareholders approve both the Issuance Proposal and the Change of Control Proposal. Thus, if either of the Issuance Proposal or the Change of Control Proposal is not approved at the Special Meeting, we will need to seek approval from our shareholders for such proposals at an adjournment of the Special Meeting or a future special or annual meeting of shareholders. It is important to note, however, that each of the Contribution Agreement and the Asset Agreement may be terminated by any of the parties thereto if the Special Meeting (including any
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adjournments or postponements thereof) shall have concluded and approval of the Nasdaq Proposals shall not have been obtained. If either agreement is terminated pursuant to such termination rights, we will be unable to seek shareholder approval of the Nasdaq Proposals at a subsequent special or annual meeting of shareholders and we will be unable to consummate the Transactions.
Q:
What is the relationship between the Company and Juniper Capital and its affiliates?
A:
As of the date of this proxy statement, none of JSTX, Rocky Creek or any other affiliate of Juniper Capital owns any capital stock of the Company or any of its affiliates.
Q:
What will be the ownership of the combined Company if the Nasdaq Proposals are approved and the Transactions are consummated?
A:
It is anticipated that, if the Nasdaq Proposals are approved and the Transactions are consummated, the ownership of the combined Company will be as follows:
the Company’s existing shareholders will own all of the 15,200,435 outstanding shares of our Common Stock, representing an approximate 41% economic interest in the Partnership and approximately 41% of the outstanding voting power of the combined Company; and
JSTX and Rocky Creek, collectively, will own 22,101,857 Common Units in the Partnership, representing an approximate 59% economic interest in the Partnership, and all of the 221,018.57 outstanding shares of Series A Preferred Stock, representing approximately 59% of the outstanding voting power of the combined Company, which will allow them to designate a majority of the members of our Board. Further, the Purchased Securities to be issued pursuant to the Asset Agreement are subject to adjustments, as described herein, which could result in the aggregate number of Common Units and shares of Series A Preferred Stock to be issued in the Transactions being increased to up to 22,597,757 Common Units and up to 225,977.57 shares of Series A Preferred Stock, respectively.
Q:
Why are the Shareholders being asked to vote on the Nasdaq Proposals?
A:
Our shares of Common Stock are listed for trading on Nasdaq, which requires us to abide by the listing rules established by Nasdaq. Under Rule 5635 of the Nasdaq Listing Rules, specifically Nasdaq Listing Rules 5635(a) and 5635(b), Company shareholder approval is required because the issuance to Juniper of the Purchased Securities in exchange for cash consideration and Contributed Assets results in (i) the issuance of shares of Common Stock (upon the redemption or exchange of the Purchased Securities) (a) having voting power equal to or in excess of 20% of the voting power of the Common Stock outstanding prior to the issuance of the Purchased Securities to Juniper and (b) in excess of 20% of the number of shares of Common Stock outstanding prior to the issuance of the Purchased Securities to Juniper, and (ii) a change of control (as defined by the Nasdaq Listing Rules) of the Company.
Q:
What is the Board’s recommendation with regards to each Proposal?
A:
The Board of Directors makes the following recommendation with regard to each Proposal:
The Board unanimously recommends a vote “FOR” the Issuance Proposal.
The Board unanimously recommends a vote “FOR” the Change of Control Proposal
The Board unanimously recommends a vote “FOR” the Adjournment Proposal
Q:
How has the trading price of the Company’s Common Stock changed since the announcement of the Transactions?
A:
On November 2, 2020, the trading date immediately before the public announcement of the Transactions, the Company’s Common Stock closed at $7.74 per share. On December 7, 2020, the trading date immediately prior to the date of this proxy statement, the Common Stock closed at $9.64.
Q:
How will the Transactions impact the shares of the Company outstanding after the Closing?
A:
As a result of the consummation of the Transactions, up to 221,018.57 shares of Series A Preferred Stock are expected to be outstanding (subject to further adjustment pursuant to the Asset Agreement, as described herein, which could result in the aggregate number of shares of Series A Preferred Stock to be issued in the Transactions being increased to up to 225,977.57 shares of Series A Preferred Stock). However, the number of shares of Common Stock outstanding will not change until the exchange or redemption of Purchased Securities issued in the Transactions. Pursuant to the A&R Partnership Agreement, the Purchased Securities may not be redeemed or exchanged for Common Stock until 180 days after the Closing Date. Notwithstanding this restriction, assuming the redemption or exchange of all of the Purchased
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Securities for Common Stock, the number of shares of Common Stock outstanding would increase by approximately 145% to approximately 37.3 million shares.
Q:
When are the Transactions expected to close?
A:
The Transactions are expected to be consummated in the first quarter of 2021, subject to receipt of approval by the Company’s shareholders of the Nasdaq Proposals, obtaining the RBL Amendment, and the satisfaction or waiver of other closing conditions described herein.
Q:
Did the Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Transactions?
A:
Yes. Although our current articles of incorporation do not require our Board to seek a third-party valuation or fairness opinion in connection with transactions of this nature, at the request of the Board, Evercore rendered its oral opinion to the Board (confirmed in writing later that day) that, as of November 2, 2020, and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its opinion, the Asset Contribution Pro Forma Equity Percentage (as defined below) is fair, from a financial point of view, to the Company. Evercore was not requested to, and did not, express an opinion regarding the private placement under the Contribution Agreement. Please see the section entitled “The Transactions—Opinion of Evercore Relating to the Asset Agreement” and the opinion of Evercore attached hereto as Annex F for additional information. In addition to the opinion of Evercore relating to the Asset Agreement, the Board also reviewed financial analyses of Evercore relating to the private placement contemplated by the Contribution Agreement as discussed in “The Transactions—Financial Analyses of the Company’s Financial Advisors—Financial Analyses of Evercore Relating to the Contribution Agreement.” In addition, the Board reviewed financial analyses of RBC Capital Markets, LLC (“RBCCM”) and Truist Securities, Inc. (Truist Securities”), financial advisors to the Company, as discussed in “The Transactions—Financial Analyses of the Company’s Financial Advisors.
Q:
What happens if I sell my shares of Common Stock before the Special Meeting?
A:
The record date for the Special Meeting is December 8, 2020. If you transfer your shares of Common Stock after the record date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. If you transfer your shares of Common Stock prior to the record date, you will have no right to vote those shares at the Special Meeting.
Q:
What vote is required to approve the Proposals presented at the Special Meeting?
A:
The approval of each of the Proposals requires the affirmative vote of a majority of the votes cast (online at the Special Meeting or by proxy) on such Proposal.
Q:
How many votes do I have at the Special Meeting?
A:
Each of the Company’s shareholders is entitled to one vote at the Special Meeting for each share of Common Stock held of record as of December 8, 2020, the record date for the Special Meeting. As of the close of business on the record date, there were 15,200,435 shares of Common Stock outstanding and entitled to vote at the Special Meeting.
Q:
What interests do current officers and directors have in the Nasdaq Proposals?
A:
In considering the recommendation of our Board to approve the Nasdaq Proposals, shareholders should be aware that certain members of our management and our Board have interests in the Transactions that are different from, or in addition to, the interests of our shareholders generally, including for certain of our officers and other Severance Plan participants, the accelerated vesting of equity awards and, with respect to all of our officers, the potential to receive certain compensatory benefits and accelerated vesting of awards if such officers are terminated without “Cause” or resign for “Good Reason” within certain specified time frames following the consummation of the Transactions. Please see the section entitled “The Transactions—Interests of Certain Persons in the Transactions” for more information.
Q:
Do I have appraisal rights if I vote against the Nasdaq Proposals?
A:
No. There are no appraisal rights available to holders of Common Stock in connection with the Nasdaq Proposals.
Q:
What do I need to do now?
A:
You are urged to read carefully and consider the information contained in this proxy statement, including “Risk Factors” and the annexes and the other documents referred to herein, and to consider how the Proposals will affect you as a shareholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.
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Q:
How do I vote?
A:
If you were a holder of record of Common Stock on December 8, 2020, the record date for the Special Meeting, you may vote with respect to the Proposals virtually at the Special Meeting or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to virtually attend the Special Meeting and vote online, obtain a proxy from your broker, bank or nominee.
Q:
What is the difference between a shareholder of record and a shareholder who holds stock in street name?
A:
Shareholders of Record. If your shares are registered in your name with our transfer agent, American Stock Transfer & Trust Company, you are a shareholder of record with respect to those shares and the proxy materials were sent directly to you.
Street Name Holders. If you hold your shares in an account at a bank, broker or other nominee, then you are the beneficial owner of shares held in “street name.” The proxy materials were forwarded to you by your bank, broker or other nominee, who is considered the shareholder of record for purposes of voting at the Special Meeting. As a beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote the shares held in your account.
Q:
What will happen if I abstain from voting or fail to vote at the Special Meeting?
A:
At the Special Meeting, we will count a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal as present for purposes of determining whether a quorum is present. For purposes of approval, a failure to vote or an abstention will have no effect on any of the Proposals.
Q:
What happens if I return a proxy but do not vote for a Proposal? What is discretionary voting? What is a broker non-vote?
A:
If you properly execute and return a proxy or voting instruction card, your shares will be voted as you specify. If you are a shareholder of record and you make no specifications on your proxy card, your shares will be voted “FOR” each Proposal, in accordance with the recommendations of the Board, as provided above.
If you are a beneficial owner and you do not provide voting instructions to your bank, broker or other nominee, your shares will not be voted with respect to any Proposal for which your broker does not have authority to vote under the rules of the Nasdaq. Banks, brokers or other nominee have the authority under the rules of the Nasdaq to vote stock for which their customers do not provide voting instructions on certain routine matters.
The Company believes that each of the Proposals presented in this proxy statement is a non-routine matter. Accordingly, if you are a beneficial owner and you do not provide voting instructions to your bank, broker or other nominee, your shares will not be voted with respect to any of the Proposals presented in this proxy statement. Without your voting instructions on these matters, a broker non-vote will occur with respect to your shares. A broker non-vote will have no effect on the votes for any of the Proposals and will not be counted for purposes of establishing a quorum at the Special Meeting, unless the broker, bank or other nominee has been instructed to vote on at least one of the Proposals.
Q:
What constitutes a quorum at the Special Meeting?
A:
A majority in voting power of the outstanding shares of Common Stock as of December 8, 2020, the record date for the Special Meeting, entitled to vote thereat must be present online or represented by proxy at the Special Meeting in order to constitute a quorum. Abstentions will be counted for purposes of establishing a quorum at the Special Meeting. Broker non-votes will not be counted for purposes of establishing a quorum at the Special Meeting, unless the broker, bank or other nominee has been instructed to vote on at least one of the Proposals.
Your shares are counted as present at the Special Meeting if you attend the Special Meeting and vote online or if you properly return a proxy by Internet, telephone or mail. A total of 15,200,435 shares of Common Stock will be required to be present online or by proxy at the Special Meeting in order to constitute a quorum.
Q:
If I am not going to virtually attend the Special Meeting, should I submit my proxy card or voting instruction card instead?
A:
Yes. Whether you plan to virtually attend the Special Meeting or not, please read the enclosed proxy statement carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided, or by returning the voting instruction card to your bank, broker or other nominee.
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Q:
May I change my vote after I have submitted my executed proxy card?
A:
Yes. You may change your vote by sending a later-dated, signed proxy card to the Company’s Corporate Secretary at the address listed below so that it is received by our secretary prior to the Special Meeting, or by virtually attending the Special Meeting online and voting. You also may revoke your proxy by sending a notice of revocation to the Company’s Corporate Secretary, which must be received prior to the Special Meeting.
Q:
What should I do if I receive more than one set of voting materials?
A:
You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.
Q:
Who can help answer my questions?
A:
If you have questions about the Proposals or if you need additional copies of this proxy statement or the enclosed proxy card you should contact:
Penn Virginia Corporation
16285 Park Ten Place, Suite 500
Houston, Texas 77084
Attention: Investor Relations
You may also contact our proxy solicitor, Okapi Partners, at:

1212 Avenue of the Americas, 24th Floor
New York, New York 10036
info@okapipartners.com
Call Collect: (212) 297-0720
Toll-Free: (844) 343-2623
To obtain timely delivery, our shareholders must request the materials no later than five business days prior to the Special Meeting.
You may also obtain additional information about the Company from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 118.
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
The Company will pay the cost of soliciting proxies for the Special Meeting. We have engaged Okapi Partners to assist in the solicitation of proxies for the Special Meeting. The Company has paid Okapi Partners an initial retainer fee of $15,000, and also agreed to pay Okapi Partners (a) fees for additional services that may be incurred, (b) a performance fee of $30,000 in the event the shareholders approve the Nasdaq Proposals and (c) reasonable out-of-pocket expenses. The Company also has agreed to indemnify Okapi Partners against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). The Company will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Common Stock for their expenses in forwarding soliciting materials to beneficial owners of Common Stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
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SUMMARY OF THE PROXY STATEMENT
This summary highlights selected information contained in this proxy statement and does not contain all of the information that may be important to you. You should read carefully this entire proxy statement, including the Annexes and accompanying financial statements, to fully understand the proposed Transactions (as described below) before voting on the Proposals to be considered at the Special Meeting (as described below). Please see the section entitled “Where You Can Find Additional Information” beginning on page 118 of this proxy statement.
The Parties to the Transactions
The Company
Penn Virginia Corporation was incorporated in Virginia in January 1882. Based out of Houston, Texas, the Company is a pure-play independent oil and gas company engaged in the development and production of oil, NGLs, and natural gas, with operations in the Eagle Ford shale in south Texas.
Penn Virginia’s Common Stock is listed on the Nasdaq under the symbol “PVAC.”
Holdings
Penn Virginia Holding Corp., or Holdings, is a Delaware corporation and a direct, wholly-owned subsidiary of the Company. As of the date of this proxy statement, Holdings is the borrower under the Second Lien Credit Agreement and the RBL.
The General Partner
PV Energy Holdings GP, LLC, or the General Partner, is a Delaware limited liability company, the general partner of the Partnership and a direct, wholly-owned subsidiary of the Company. The General Partner was formed on October 30, 2020 and has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Contribution Agreement and the Asset Agreement.
The Partnership
PV Energy Holdings, L.P., or the Partnership, is a Delaware limited partnership and a direct, wholly-owned subsidiary of the Company. The Partnership was formed on October 30, 2020 and has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Contribution Agreement and the Asset Agreement. From and after the Closing, we will operate our business through the Partnership and its subsidiaries, including Holdings.
The mailing address of the principal executive offices for each of the Company Parties is 16285 Park Ten Place, Suite 500, Houston, Texas 77084, and their telephone number at that address is (713) 722-6500.
Juniper Capital
Juniper Capital Advisors, L.P. was formed in Delaware on July 24, 2014 and is an advisor to certain investments funds that have over $1.2 billion of cumulative equity commitments. Juniper Capital is based in Houston, Texas and focuses on investing with high-quality management teams to provide transformational equity capital to demonstrate the value and productive potential of oil and gas properties located primarily in the continental United States.
JSTX
JSTX Holdings, LLC, or JSTX, is a Delaware limited liability company and an affiliate of Juniper Capital. JSTX has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Contribution Agreement and the Asset Agreement.
Rocky Creek
Rocky Creek Resources LLC, or Rocky Creek, is a Delaware limited liability company, an affiliate of Juniper Capital and is operated by Boomtown Oil LLC. Rocky Creek is an E&P company that currently operates in Lavaca and DeWitt counties with the Eagle Ford Shale and Austin Chalk formations as the primary development targets.
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Juniper Guarantor
Juniper Capital III, L.P., or Juniper Guarantor, is a Delaware limited partnership, the parent of JSTX and an affiliate of Juniper Capital. Juniper Guarantor is an investment fund with $677.5 million in aggregate commitments.
Transaction Documents
This section describes the material provisions of the Contribution Agreement, the Asset Agreement and certain additional agreements entered into in connection with, or to be entered into pursuant to, the Transaction Agreements, but does not purport to describe all of the terms thereof. You should carefully read this entire proxy statement and the documents incorporated by reference herein, including the full text of the Contribution Agreement, the Asset Agreement and the other Transaction Documents attached hereto as Annexes A through E, for a more complete understanding of the terms of the Transaction Documents and the proposed Transactions.
Contribution Agreement
On November 2, 2020, the Company and the Partnership entered into the Contribution Agreement with JSTX. The Contribution Agreement provides that, on the terms and subject to the conditions contained therein, (i) prior to the Closing, the Company will effectuate the Conversions, whereby its direct and indirect corporate subsidiaries, including Holdings, will become limited liability companies which will be disregarded for U.S. federal income tax purposes, (ii) prior to or concurrently with the Closing, the Company will contribute to the Partnership all of its equity interests in the resulting entity following the Conversion of Holdings in exchange for a number of Common Units equal to the number of shares of Common Stock outstanding as of the Closing Date and (iii) JSTX will make the Capital Contribution to the Partnership, in the amount of $150,000,000, in exchange for 17,142,857 Common Units and 171,428.57 shares of Series A Preferred Stock. Pursuant to the Contribution Agreement, the Partnership has agreed to use the proceeds from the Capital Contribution (less all applicable costs, fees and expenses in connection with the Transactions, the Second Lien Credit Agreement and RBL) for general partnership purposes, including to make certain prepayments of its outstanding borrowings under the Second Lien Credit Agreement and RBL, which prepayments are conditions precedent to the effectiveness of the amendments to the Second Lien Credit Agreement provided in the Second Lien Credit Agreement Amendment.
Asset Agreement
On November 2, 2020, the Company and the Partnership entered into the Asset Agreement with Rocky Creek. The Asset Agreement provides that, on the terms and subject to the conditions contained therein, Rocky Creek will contribute to the Partnership (or its designated affiliate) the Contributed Assets, comprised of all of Rocky Creek’s right, title and interest to certain of its oil and gas interests and associated assets (including seismic data) located within Lavaca County, Texas and Fayette County, Texas, except for royalty and overriding royalty interests owned by a subsidiary of Rocky Creek and a customary list of exclusions, and the Partnership (or its designated affiliate) will assume certain liabilities from Rocky Creek, in exchange for 4,959,000 Common Units valued at $7.74 per Common Unit, or $38,382,660 in the aggregate, and 49,590 shares of Series A Preferred Stock at a price per share equal to the par value thereof. The number of Common Units and shares of Series A Preferred Stock to be issued to Rocky Creek and the related value ascribed to the Contributed Assets are subject to certain customary adjustments set forth in the Asset Agreement, provided that the consideration owed pursuant to any increase in valuation of the Contributed Assets in excess of 10% of the Purchase Price shall be deliverable in cash, and no more than an additional 495,900 Common Units, together with an additional 4,959 shares of Series A Preferred Stock, shall be issued pursuant to such adjustments.
Limited Guarantee
On November 2, 2020, Juniper Guarantor executed the Limited Guarantee in favor of the Company, pursuant to which Juniper Guarantor has agreed to guarantee JSTX’s obligations contained in the Contribution Agreement, including the payment of the Capital Contribution, subject to the terms and conditions contained in such Limited Guarantee. For more information about the Limited Guarantee, please see the section entitled “The Transactions—Limited Guarantee.”
Second Lien Credit Agreement Amendment
On November 2, 2020, the Company, Holdings and the guarantors under the Second Lien Credit Agreement entered into the Second Lien Credit Agreement Amendment with the consenting lenders party thereto. Upon the consummation of the Transactions and the satisfaction of certain other conditions precedent set forth therein, including the prepayment of $50,000,000 of outstanding advances under the Second Lien Credit Agreement and the prepayment of $100,000,000 of
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outstanding loans under the RBL (less certain costs, fees and expenses related to the Transactions, the Second Lien Credit Agreement and the RBL), the Second Lien Credit Agreement Amendment provides that, in addition to other changes described therein, the maturity date of the Second Lien Credit Agreement will be automatically extended to September 29, 2024. For more information about the Second Lien Credit Agreement Amendment, please see the section entitled “The Transactions—Second Lien Credit Agreement Amendment.
Articles of Amendment
Upon the approval of the Nasdaq Proposals, the Company will file the Articles of Amendment establishing the Series A Preferred Stock and containing the powers, designations, preferences and rights of the Series A Preferred Stock with the State Corporation Commission of the Commonwealth of Virginia. The Series A Preferred Stock will be non-economic voting interests in the Company and each one one-hundredth (1/100th) of a share of Series A Preferred Stock will entitle the holder thereof to one vote on all matters submitted to a vote of the holders of Common Stock of the Company (subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions). For more information about the terms of the Series A Preferred Stock, please see the section entitled “The Transactions—Articles of Amendment.
A&R Partnership Agreement
At the Closing, the Company, JSTX and Rocky Creek, as limited partners, and the General Partner, as the sole general partner, will execute the A&R Partnership Agreement. The A&R Partnership Agreement will define the rights of the parties thereto and the terms of the Common Units. The Common Units will be economic limited partner interests in the Partnership and, beginning 180 days after the Closing, JSTX and Rocky Creek will have the right to redeem or exchange each Common Unit (together with one one-hundredth (1/100th) of a share of Series A Preferred Stock) for one share of Common Stock or, at the Partnership’s election, cash. For more information about the terms of the Common Units, please see the section entitled “The Transactions—A&R Partnership Agreement.
Investor Agreement
At the Closing, the Company, JSTX and Rocky Creek will enter into the Investor Agreement, pursuant to which JSTX and Rocky Creek (i) will be granted certain registration rights with respect to the Common Stock issued or issuable upon redemption or exchange of the Purchased Units pursuant to the A&R Partnership Agreement (the “Registrable Securities”) and (ii) will be entitled to certain rights and subject to certain obligations with respect to the governance of the Company, including rights to designate a number of members of the Board based on Juniper’s beneficial ownership of our Common Stock (or Purchased Securities redeemable or exchangeable therefor).
Under the Investor Agreement, we are required to, within 60 calendar days after the Closing, file a registration statement registering the resale of the Registrable Securities (which may not become effective prior to 180 days following the Closing), and at any time after such registration statement becomes effective, to conduct certain underwritten offerings upon the request of holders of Registrable Securities. The Investor Agreement also provides, among other things, holders of Registrable Securities with certain customary piggyback rights.
At Closing, in accordance with the Articles of Amendment and the Investor Agreement, the Board will be increased from four members to nine members, and Juniper will designate five new members to the Board of the combined Company (the directors from time to time appointed to the Board pursuant to Juniper’s designation rights under the Investor Agreement, the “Investor Directors”) (who may initially all be affiliates or employees of Juniper or its affiliates (“Investor Affiliated Directors”)). Juniper has selected Mr. Edward Geiser (to serve as the new Chairman), and Messrs. Kevin Cumming, Joshua Schmidt, Temitope Ogunyomi and Tim Gray, all Investor Affiliated Directors, to serve as the five initial Investor Directors upon Closing. For more information about the composition of the Board from and after the Closing, please see the section entitled “The Transactions—Board of Directors of the Combined Company.
From and after the Closing, Juniper and its permitted transferees will continue to have the right to appoint Investor Directors to the Board and to have Investor Directors sit on certain committees of the Board for so long as Juniper continuously owns Common Stock (or Purchased Securities redeemable or exchangeable therefor), subject to applicable law, stock exchange rules and step-downs in the number of directors Juniper may designate based on Juniper’s continuous percentage ownership of our Total Shares (as defined herein). Pursuant to the Investor Agreement, Juniper will also agree to vote in favor of the nominees proposed by the Nominating & Governance Committee of the Board (the “Governance Committee”) at our 2021 Annual Meeting of Shareholders.
For more information about the Investor Agreement and the rights and obligations of the parties thereunder, please see the section entitled “The Transactions—Investor Agreement.
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The Issuance Proposal
The shareholders of the Company are being asked to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the potential issuance of up to 22,597,757 shares of our Common Stock upon the redemption or exchange of the Purchased Securities proposed to be issued to affiliates of Juniper Capital pursuant to the Transactions, which proposal is conditioned upon the approval of the Change of Control Proposal. Please see the section entitled “Proposal No. 1—The Issuance Proposal” for more information, and the section entitled “The Transactions” for more information about the issuances contemplated by the Transaction Agreements.
The Change of Control Proposal
The shareholders of the Company are being asked to approve, for purposes of complying with Nasdaq Listing Rule 5635(b), the change of control under Nasdaq Listing Rule 5635(b) that would result from the proposed issuance to affiliates of Juniper Capital of up to 225,977.57 shares of Series A Preferred Stock pursuant to the Transactions, which proposal is conditioned upon the approval of the Issuance Proposal. Please see the section entitled “Proposal No. 2—The Change of Control Proposal” for more information, and the section entitled “The Transactions” for more information about the issuances contemplated by the Transaction Agreements.
The Adjournment Proposal
The shareholders of the Company are being asked to approve a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Nasdaq Proposals. Please see the section entitled “Proposal No. 3—The Adjournment Proposal” for more information.
Date, Time and Place of the Special Meeting
The Special Meeting will be held virtually, conducted via live audio webcast on January 13, 2021, at 10:00 a.m., Central Time, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the Proposals. You will be able to attend the Special Meeting online and submit questions during the Special Meeting by visiting www.virtualshareholdermeeting.com/PVAC2021SM. You will also be able to vote your shares electronically at the Special Meeting. We believe that, given COVID-19, a virtual shareholder meeting provides greater access to those who may want to attend the Special Meeting.
Record Date and Voting Rights
Only shareholders of record at the close of business on December 8, 2020, the record date for the Special Meeting, are entitled to notice of, and to vote at, the Special Meeting or any adjournment, postponement or continuation thereof. You are entitled to one vote for each share of our Common Stock that you owned as of the close of business on the record date. All shares represented by properly executed and delivered proxies will be voted at the Special Meeting. On the record date, there were 15,200,435 shares of Common Stock outstanding and entitled to vote.
If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted.
Quorum and Required Vote for Proposals for the Special Meeting
A quorum of the Company’s shareholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if the holders of a majority in voting power of the outstanding shares of Common Stock as of the close of business on the record date entitled to vote thereat are present online or represented by proxy at the Special Meeting. Abstentions will be counted for the purposes of establishing a quorum. Broker non-votes will not be counted for purposes of establishing a quorum at the Special Meeting, unless the broker, bank or other nominee has been instructed to vote on at least one of the Proposals.
The approval of each of the Proposals requires the affirmative vote of a majority of the votes cast (online at the Special Meeting or by proxy) on such Proposal by holders of the Company’s outstanding shares of Common Stock entitled to vote at the Special Meeting. An abstention, a shareholder’s failure to vote by proxy or to vote online at the Special Meeting and a broker non-vote are not counted as a vote cast and, therefore, will have no effect on any of the Proposals.
The Transactions are conditioned on, among other things, the approval of both the Issuance Proposal and the Change of Control Proposal at the Special Meeting. In addition, approval of the Issuance Proposal is conditioned upon approval of the Change of Control Proposal, and vice versa. The Adjournment Proposal is not conditioned on the approval of any other Proposal set forth in this proxy statement.
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It is important for you to note that in the event that either of the Issuance Proposal or the Change of Control Proposal does not receive the requisite vote for approval at the Special Meeting, including any adjournments or postponements thereof, we will not be able to consummate the Transactions.
Proxy Solicitation
The Company is soliciting proxies on behalf of the Board. Proxies may be solicited by mail. The Company has also engaged Okapi Partners to assist in the solicitation of proxies. See “The Special Meeting—Proxy Solicitation.”
If a shareholder grants a proxy, it may still vote its shares if present online at the Special Meeting if it revokes its proxy before the Special Meeting. A shareholder may also change its vote by submitting a later-dated proxy, as described in the section entitled “The Special Meeting—Revocation of Proxy.”
Post-Closing Organizational Structure
In connection with the consummation of the Transactions, we will effectuate the Reorganization, including the Conversions and implementation of an “up-C” structure, which is intended to, among other things, result in the holders of Series A Preferred Stock having a voting interest in the Company that is commensurate with such holders’ economic interest in the Partnership. As a result of the Reorganization, from and after the Closing, we will operate our business through the Partnership and its subsidiaries. Please see “The Transactions−Post-Closing Organizational Structure” for more information regarding the Reorganization, including diagrams illustrating our pre- and post-Transactions organizational structure.
Potential Effects of the Transactions on the Company’s Shareholders
If our shareholders approve the Change of Control Proposal and the Issuance Proposal, current shareholders will experience immediate and significant dilution to their current equity ownership in the Company upon issuance of the Purchased Securities. In addition, upon the Closing, our existing shareholders are expected to control approximately 41% of our issued and outstanding voting power, while Juniper is expected to control approximately 59% of our issued and outstanding voting power and will have the right to designate a majority of the members of our Board. See “The Transactions—Potential Effects of the Transactions on the Company’s Shareholders.
Government and Regulatory Approvals
The Company and Juniper have determined that the Transactions are not subject to the filing requirements of the HSR Act, and neither the Company nor Juniper is aware of any material regulatory approvals or actions that are required for completion of the Transactions. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any such additional approvals or actions will be obtained.
Accounting Treatment
The Transactions will result in a change of control of the Company with Juniper determined to be the accounting acquirer. Upon the Closing of the Transactions, our existing shareholders are expected to control approximately 41% of our issued and outstanding voting power while Juniper is expected to control approximately 59% of our issued and outstanding voting power and it shall have the right to designate a majority of the members of our Board. Juniper is currently not expected to elect, as permitted in the accounting guidance, to apply push-down accounting to its acquisition of the Company. As a result, the Company will continue to maintain its historical basis of accounting. The Contributed Assets, with an estimated fair value of approximately $38,400,000, will be reflected in the Company’s financial statements at Closing at their historical carrying values.
Following the completion of the Transactions, the Company will be a holding company whose principal asset will consist of approximately 41% of the outstanding Common Units that it acquires directly from the Partnership in conjunction with the Transactions. The remaining outstanding Common Units will be held by Juniper. Through its ownership of the General Partner, which will be the sole general partner of the Partnership, the Company will operate and control the business and affairs of the Partnership and its direct and indirect subsidiaries and, through the Partnership and its direct and indirect subsidiaries, conduct its business.
No Appraisal Rights
Appraisal rights are not available to shareholders in connection with the Transactions or any of the Proposals to be considered at the Special Meeting described in this proxy statement. See “The Transactions—No Appraisal Rights in Connection with the Transactions.
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Interests of Certain Persons in the Transactions
In considering the recommendation of our Board to vote for the proposals presented at the Special Meeting, including the Nasdaq Proposals, you should be aware that aside from their interests as shareholders, certain of our executive officers and non-employee members of our Board have interests in the Transactions that are different from, or in addition to, the interests of our shareholders generally. Our Board was aware of and considered these interests, among other matters, in evaluating the Transactions and Transaction Agreements and in recommending to our shareholders that they vote in favor of the proposals presented at the Special Meeting, including the Nasdaq Proposals. Please see the section entitled “The Transactions—Interests of Certain Persons in the Transactions” for more information.
Reasons for the Transactions
Our Board considered the following positive factors, although not weighted or in any order of significance, in approving the Transactions and the issuance of the Purchased Securities in connection therewith:
Business and Financial Condition and Prospects. The Board’s knowledge of the Company’s business, operations, financial condition, earnings and prospects and of the Contributed Assets, taking into account the results of due diligence review of the Contributed Assets undertaken by the Company’s management.
Substantial Improvements to the Company’s Balance Sheet and Increased Liquidity. The Transactions will result in the extension of the maturity under the Second Lien Credit Agreement from September 2022 to September 2024 and are expected to increase liquidity under the RBL and reduce fixed interest expense significantly. The Transactions also position the Company for potential future consolidation opportunities and allow the Company to better weather volatile commodity prices.
The Equity Transaction Includes a Premium and Is Backed by A Parent Guarantee. The Capital Contribution of $150,000,000 is valued at $8.75 per share (of Common Stock issuable upon the redemption or exchange of the Purchased Securities to be issued pursuant to the Equity Transaction), which represents a 13% premium per share over the closing price of the Common Stock on November 2, 2020 (the trading day immediately prior to the announcement of the Transactions). Additionally, the Juniper Guarantor, pursuant to the Limited Guarantee, is guaranteeing the obligations of JSTX under the Contribution Agreement, including the payment of the Capital Contribution.
Expansion in the Eagle Ford with Complementary Assets. The Contributed Assets complement the Company’s existing assets and add production, cash flow, and additional drilling locations without an increase in debt. The Asset Transaction will expand the Company’s footprint in the Eagle Ford and is expected to allow for longer laterals, lower per unit operating expenses, and increase the number of wells per pad, all with no anticipated increase to general and administrative expenses.
Opinion of Evercore Relating to the Asset Agreement. The Board’s receipt of Evercore’s oral opinion to the Board (confirmed in writing later that day) that, as of November 2, 2020, and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its opinion, the Asset Contribution Pro Forma Equity Percentage (as defined below) is fair, from a financial point of view, to the Company, as more fully described in the section entitled “The Transactions—Opinion of Evercore Relating to the Asset Agreement.” The full text of the written opinion of Evercore is attached as Annex F to this proxy statement.
Financial Analyses of RBC Capital Markets, LLC. The delivery by RBCCM of the RBCCM Materials (as defined below) on November 2, 2020 to the Board, as more fully described in the section entitled “The Transactions—Financial Analyses of the Company’s Financial Advisors—Financial Analyses of RBC Capital Markets, LLC.
Financial Analyses of Truist Securities. The Board considered the financial analyses with respect to the Company reviewed and discussed with the Board by representatives of Truist Securities, on November 2, 2020, as more fully described in the section entitled “The Transactions—Financial Analyses of the Company’s Financial Advisors—Financial Analyses of Truist Securities.”
Terms of the Transaction Agreements; Ability to Pursue, Consider and Respond to Company Alternative Proposals. The terms of the Transaction Agreements, principally the fact that the Company is not prohibited from soliciting alternative proposals and is permitted to respond to and negotiate unsolicited proposals, subject to providing notice to Juniper, and the provisions granting the Board the right to make a Change in Recommendation (as defined herein) if
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the Board makes a good faith determination that the failure to make a Change in Recommendation would be inconsistent with its fiduciary duties under applicable law, and the belief that the aggregate termination fee of $9,419,133 payable in the event that JSTX or Rocky Creek, as applicable, terminates the Transaction Agreements as a result of such Change in Recommendation was reasonable.
Shareholder Approval. The fact that the Company’s shareholders will have the opportunity to vote on the Nasdaq Proposals, which is a condition precedent to the Transactions.
For more information about the Board’s decision-making process, please see the section entitled “The Transactions—Reasons for the Transactions; Recommendation of the Board.”
Conditions to Closing of the Transactions
Mutual Closing Conditions
The respective obligations of the Company and the Partnership, on the one hand, and JSTX or Rocky Creek (as applicable), on the other hand, to consummate and effect the Transactions contemplated by the applicable Transaction Agreement are subject to the satisfaction or, to the extent permitted by applicable law, waiver by the Company (on our behalf and on behalf of the Partnership) and JSTX or Rocky Creek (as applicable), at or prior to the Closing, of certain conditions, including the following:
no judgments or orders issued by any governmental agency or law shall be in effect restraining, enjoining, making illegal or otherwise prohibiting the consummation of the transactions contemplated by the applicable Transaction Agreement;
the approval of both of the Nasdaq Proposals, by the affirmative vote of the holders of at least a majority of all the votes cast on such Proposals at the Special Meeting where a quorum is present, shall have been obtained;
the Company shall have timely filed all required notices and other documents related to the listing of the Common Stock for which the Purchased Securities may be exchanged or redeemed;
(A) the Second Lien Credit Agreement Amendment shall remain in full force and effect and (B) the Company shall have obtained the RBL Amendment and such RBL Amendment shall be in such form as is reasonably acceptable to JSTX and the Company;
the transactions contemplated by the other Transaction Agreement shall have been consummated or shall be consummated contemporaneously with the closing of the transactions contemplated by the applicable Transaction Agreement; and
solely with respect to the Asset Agreement: with respect to the Contributed Assets, (i) the total cost of certain title defects, environmental liabilities and casualty losses and (ii) the value of assets excluded pursuant to the Asset Agreement as of the Closing Date must be, in the aggregate, less than 25% of the unadjusted value of the Purchased Units to be issued to Rocky Creek pursuant to the Asset Agreement.
Juniper Parties Closing Conditions
The obligations of JSTX or Rocky Creek (as applicable) to consummate and effect the Transactions contemplated by the applicable Transaction Agreement are subject to the satisfaction or, to the extent permitted by applicable law, waiver by JSTX or Rocky Creek (as applicable), at or prior to the Closing, of certain conditions, including the following:
solely with respect to the Contribution Agreement: the representations and warranties of the Company related to the due authorization and issuance of the Purchased Securities, capitalization and authority, without giving effect to any limitation contained therein as to materiality or Company Material Adverse Effect (as defined in the Contribution Agreement) or any similar limitation contained therein, must be true and correct in all material respects as of November 2, 2020 and as of the Closing Date as if made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date); the representations and warranties of the Company related to absence of a Company Material Adverse Effect and brokers must be true and correct as of November 2, 2020 and as of the Closing Date; and all other representations and warranties of the Company, without giving effect to any limitation contained therein as to materiality or Company Material Adverse Effect, must be true and correct as of November 2, 2020 and as of the Closing Date as if made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties of the Company to be so true and correct, individually or in the aggregate, has not had and is not reasonably likely to have a Company Material Adverse Effect;
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solely with respect to the Asset Agreement: (i) fundamental representations of the Company (the representations and warranties related to organization, existence and qualification, authorization and enforceability, certain no conflicts representations, brokers, bankruptcy, capitalization and the Company’s subsidiaries) shall be true and correct in all respects on and as of November 2, 2020 and the Closing Date, with the same force and effect as though such fundamental representations had been made or given on and as of the Closing Date (other than fundamental representations of the Company that are expressly made as of a specified date, which need only be true and correct on and as of such specified date) and (ii) the other representations and warranties of the Company (other than those related to environmental or title matters) shall be true and correct in all respects (without regard to materiality, Company Material Adverse Effect (as defined in the Asset Agreement) or similar qualifiers) on and as of November 2, 2020 and the Closing Date, with the same force and effect as though such representations and warranties had been made or given on and as of the Closing Date (other than representations and warranties that are expressly made as of a specified date, which need only be true and correct on and as of such specified date), except for those breaches, if any, of such representations and warranties that, individually or in the aggregate, would not have a Company Material Adverse Effect;
the Company shall have performed and complied with, in all material respects, all covenants and obligations required to be performed by us under the applicable Transaction Agreement at or prior to the Closing Date;
the Company shall have delivered to JSTX or Rocky Creek (as applicable) a certificate dated as of the Closing Date and signed on our behalf by an executive officer, certifying that certain of the closing conditions have been satisfied; and
solely with respect to the Contribution Agreement: since November 2, 2020, there shall not have occurred a Company Material Adverse Effect (as defined in the Contribution Agreement).
Company Closing Conditions
The obligations of the Company and the Partnership to consummate and effect the Transactions contemplated by the applicable Transaction Agreement are also subject to the satisfaction or, to the extent permitted by applicable law, waiver by the Company (on our behalf and on behalf of the Partnership), at or prior to the Closing, of certain conditions, including the following:
solely with respect to the Contribution Agreement: the representations and warranties of JSTX must be true and correct in all material respects (other than those related to organization, standing and power and brokers, which must be true and correct in all respects) as of November 2, 2020 and as of the Closing Date (or, if given as of an earlier date, as of such earlier date);
solely with respect to the Asset Agreement: (i) fundamental representations of Rocky Creek (the representations and warranties related to organization, existence and qualification, authorization and enforceability, certain no conflicts representations, brokers, and bankruptcy) shall be true and correct in all respects on and as of November 2, 2020 and the Closing Date, with the same force and effect as though such fundamental representations had been made or given on and as of the Closing Date (other than fundamental representations of Rocky Creek that are expressly made as of a specified date, which need only be true and correct on and as of such specified date) and (ii) the other representations and warranties of Rocky Creek (other than those related to environmental or title matters) shall be true and correct in all respects (without regard to materiality, Rocky Creek Material Adverse Effect (as defined in the Asset Agreement) or similar qualifiers) on and as of November 2, 2020 and the Closing Date, with the same force and effect as though such representations and warranties had been made or given on and as of the Closing Date (other than representations and warranties that are expressly made as of a specified date, which need only be true and correct on and as of such specified date), except for those breaches, if any, of such representations and warranties that, individually or in the aggregate, would not have a Rocky Creek Material Adverse Effect;
JSTX or Rocky Creek (as applicable) shall have performed and complied with, in all material respects, all covenants and obligations required to be performed by it under the applicable Transaction Agreement at or prior to the Closing Date; and
JSTX or Rocky Creek (as applicable) shall have delivered to us a certificate dated as of the Closing Date and signed on their behalf of JSTX or Rocky Creek (as applicable), certifying that certain of the closing conditions have been satisfied.
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Opinion of Evercore Relating to the Asset Agreement
The Company retained Evercore to act as financial advisor to the Company in connection with the Transactions and, as part of that engagement, requested Evercore to render an opinion described below with respect to the contribution of the Contributed Assets pursuant to the Asset Agreement (the “Asset Contribution”). On November 2, 2020, at a meeting of the Board and at the request of the Board, Evercore rendered its oral opinion to the Board (confirmed in writing later that day) that, as of November 2, 2020, and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its opinion, the Asset Contribution Pro Forma Equity Percentage (as defined below) is fair, from a financial point of view, to the Company. For this purpose, the term “Asset Contribution Pro Forma Equity Percentage” means the pro forma percentage of outstanding Common Stock represented by the Purchased Securities to be issued to Rocky Creek under the Asset Agreement, before giving effect to the private placement under the Contribution Agreement. Evercore was not requested to, and did not, express an opinion regarding the private placement under the Contribution Agreement.
The full text of the written opinion of Evercore, dated as of November 2, 2020, which sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken in rendering its opinion, is attached hereto as Annex F. You are urged to read Evercore’s opinion carefully and in its entirety. Evercore’s opinion was addressed to, and provided for the information and benefit of, the Board in connection with its evaluation of the fairness of the Asset Contribution Pro Forma Equity Percentage, from a financial point of view, to the Company, and did not address any other aspects or implications of the Asset Contribution or any other Transaction. Evercore’s opinion should not be construed as creating any fiduciary duty on Evercore’s part to any party and such opinion was not intended to be, and does not constitute, a recommendation to the Board or to any other persons in respect of the Asset Contribution or any other Transaction, including as to how any common shareholder of the Company should act or vote in respect of the Asset Contribution or any other Transaction. Evercore’s opinion did not address the relative merits of the Asset Contribution as compared to other business or financial strategies or opportunities that might be available to the Company, nor did it address the underlying business decision of the Company to engage in the Asset Contribution or any other Transaction.
We encourage you to read Evercore’s opinion attached as Annex F and the section entitled “The Transactions—Opinion of Evercore Relating to the Asset Agreement” of this proxy statement carefully and in their entirety. Evercore has consented to the inclusion of a summary of its opinion in this proxy statement and the attachment of the full text of its opinion as Annex F.
Financial Analyses of the Company’s Financial Advisors
Financial Analyses of RBC Capital Markets, LLC
Penn Virginia retained RBCCM to provide a presentation of certain financial analyses (the “RBCCM Materials”) to the Board in connection with the Transactions. The summary of the RBCCM Materials is set forth below.
The RBCCM Materials were provided for the benefit, information and assistance of the Board (in its capacity as such) in connection with its evaluation of the Transactions. The RBCCM Materials did not address the underlying business decision of the Company to engage in the Transactions (including the Reorganization), or the relative merits of the Transactions (including the Reorganization) compared to any alternative business strategy or transaction that may be available to the Company or in which the Company might engage. The terms of the Transactions were determined solely through negotiations between the parties to the Transactions.
The RBCCM Materials do not constitute, and are not intended to represent (i) any view or opinion as to (a) the fairness, from a financial point of view or otherwise, of the contemplated Transactions or Reorganization, any aspect, term or implication of the financial aspects of the Transactions (including the Reorganization) to the Company, shareholders or to any other person, (b) the solvency or fair value of the Company, Rocky Creek, the combined Company, or any other entity under any state, federal or other laws relating to bankruptcy, insolvency or similar matters, (c) the actual value of any Company equity when issued or distributed in the Transactions or the price or range of prices at which any Company equity, or any other securities of the Company may trade or otherwise be transferable at any time, including following announcement or consummation of the Transactions (including the Reorganization), (d) any legal, regulatory, tax, accounting and similar matters, as to which RBCCM understands that the Company has obtained such advice as it deems necessary from qualified professionals or (e) the fairness of the amount or nature of the compensation (if any) or other consideration to any officers, directors or employees of any party, or class of such persons, relative to the consideration to be paid pursuant to the Transactions, or (ii) any recommendation to the Company or any shareholder as to how the Company or any such shareholder should vote or act with respect to the Transactions or any proposal to be voted upon in connection with the Transactions or otherwise.
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For a further discussion of the RBCCM Materials, the Company’s relationship with RBCCM and the terms of RBCCM’s engagement, see “The Transactions—Financial Analyses of the Company’s Financial Advisors—Financial Analyses of RBC Capital Markets, LLC” beginning on page 79 of this proxy statement.
Financial Analyses of Truist Securities
At the meeting of the Board on November 2, 2020, Truist Securities, a financial advisor to the Company in connection with the Transactions, reviewed and discussed its financial analyses with respect to the Company with the Board in its capacity as such.
Truist Securities was not requested to, and did not, express any view or opinion as to the fairness from a financial point of view or otherwise to the Company, the Partnership or any of their respective securityholders of the consideration to be received or paid by the Company, the Partnership or any other party in the Transactions for the securities to be issued by the Company or the Partnership in the Transactions or any other aspect of the Transactions (including the Reorganization) or any related matters. The financial analyses of Truist Securities do not constitute advice or a recommendation to any shareholder of the Company as to how such shareholder should vote or act with respect to the proposed Transactions (including the Reorganization) or any other matter.
For a further discussion of Truist Securities’ financial analyses reviewed and discussed with the Board, see the section entitled “The Transactions—Financial Analyses of the Company’s Financial Advisors—Financial Analyses of Truist Securities.
Recommendation of the Board
The Board unanimously determined that the Transaction Documents and the Transactions are in the best interests of, and are advisable to, the Company and its shareholders. The Board unanimously recommends that our shareholders vote “FOR” each of the Proposals. Note that a vote against either of the Nasdaq Proposals will, in effect, be a vote against both Proposals and the Transactions as a whole.
When you consider the recommendation of our Board in favor of approval of the Nasdaq Proposals, you should keep in mind that certain members of our management and our Board have interests in the Transactions that are different from, or in addition to, your interests as a shareholder. Shareholders should take these interests into account in deciding whether to approve the Proposals presented at the Special Meeting, including the Nasdaq Proposals.
For more information regarding the Board’s recommendation and its reasons for approving the Transactions and making such recommendation, see “The Transactions—Reasons for the Transactions; Recommendation of the Board.”
Risk Factors
In evaluating the Transactions and the Proposals to be considered and voted on at the Special Meeting, you should carefully review and consider the risk factors set forth under the section entitled “Risk Factors” beginning on page 39 of this proxy statement. The occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or circumstances, may have a material adverse effect on (i) the ability of the Company and Juniper to complete the Transactions, and (ii) the business, cash flows, financial condition and results of operations of the Company prior to the consummation of the Transactions and the combined Company following consummation of the Transactions.
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PENN VIRGINIA SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table shows our selected historical consolidated financial information for the periods and as of the dates indicated.
The selected historical consolidated financial information as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 is derived from our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, and incorporated by reference herein. The selected historical consolidated financial information as of September 30, 2020 and for the nine months ended September 30, 2020 and 2019 is derived from our unaudited consolidated financial information included in our Quarterly Report on Form 10-Q for the three months ended September 30, 2020 and incorporated by reference herein. The selected historical consolidated financial information (1) as of December 31, 2017 and 2016, and for the period from September 13, 2016 through December 31, 2016 (Successor) and (2) for the period from January 1, 2016 through September 12, 2016, as of September 12, 2016 and as of and for the year ended December 31, 2015 (Predecessor) have been derived from the Company’s consolidated financial statements which have not been incorporated by reference herein.
The information set forth below is only a summary and is not necessarily indicative of the results of future operations of the Company, nor does it include the effects of the Transactions. This information should be read together with the other information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the three months ended September 30, 2020, including the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto. Please see the section entitled “Where You Can Find More Information” beginning on page 118.
 
Successor(1)
Predecessor(1)
 
Nine Months Ended
September 30,
Year Ended
December 31,
September 13
Through
December 31,
2016
January 1
Through
September 12,
2016
Year Ended
December 31,
2015
(in thousands, except per share amounts and production)
2020
2019
2019
2018
2017
 
(unaudited)
 
 
 
 
 
 
Statements of Operations and Other Data:
 
 
 
 
 
 
 
 
Revenues(2)
$206,272
$347,299
$471,216
$440,832
$160,054
$39,003
$94,310
$305,298
Operating income (loss)(3)
$(261,768)
$126,596
$176,821
$208,755
$51,872
$11,413
$(20,867)
$(1,564,976)
Net income (loss)(4)
$(175,034)
$67,290
$70,589
$224,785
$32,662
$(5,296)
$1,054,602
$(1,582,961)
Preferred stock dividends
$
$
$
$
$
$
$5,972
$22,789
Income (loss) attributable to common shareholders
$(175,034)
$67,290
$70,589
$224,785
$32,662
$(5,296)
$1,048,630
$(1,605,750)
Income (loss) per common share, basic
$(11.54)
$4.45
$4.67
$14.93
$2.18
$(0.35)
$11.91
$(21.81)
Income (loss) per common share, diluted
$(11.54)
$4.44
$4.67
$14.70
$2.17
$(0.35)
$8.50
$(21.81)
Weighted-average shares outstanding:
 
 
 
 
 
 
 
 
Basic
15,168
15,105
15,110
15,059
14,996
14,992
88,013
73,639
Diluted
15,168
15,165
15,126
15,292
15,063
14,992
124,087
73,639
Dividends declared per share
$
$
$
$
$
$
$
$
Cash provided by operating activities
$189,723
$244,213
$320,194
$272,132
$81,710
$30,774
$30,247
$169,303
Cash paid for capital expenditures
$139,010
$291,733
$362,743
$430,592
$115,687
$4,812
$15,359
$364,844
Total sales volume (MBOE)
6,909
7,425
10,121
7,944
3,779
1,039
3,346
7,923
 
Successor(1)
Predecessor(1)
 
September 30,
December 31,
September 12,
December 31,
 
2020
2019
2019
2018
2017
2016
2016
2015
(in thousands, except reserves)
(unaudited)
 
 
 
 
 
 
 
Balance Sheet and Other Data:
 
 
 
 
 
 
 
 
Property and equipment, net
$835,500
$1,009,144
$1,120,425
$927,994
$529,059
$247,473
$253,510
$344,395
Total assets
$953,174
$1,211,780
$1,218,238
$1,068,954
$629,597
$291,686
$333,974
$517,725
Total debt
$518,858
$562,445
$555,028
$511,375
$265,267
$25,000
$75,350
$1,224,383
Shareholders’ equity (deficit)
$347,732
$516,658
$520,745
$447,355
$221,639
$185,548
$190,895
$(915,121)
Actual shares outstanding at period-end
15,200
15,123
15,136
15,081
15,019
14,992
14,992
81,253
Proved reserves as of December 31, (MMBOE)
N/A
N/A
133
123
73
49
N/A
44
(1)
Upon our emergence from bankruptcy, we adopted and applied fresh start accounting. Accordingly, our financial statements for periods after September 12, 2016 are not comparable to those prior to that date. Financial information for the periods up to and including September 12, 2016 are
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referred to herein as those of the “Predecessor” while those beginning on September 13, 2016 and all periods thereafter are referenced as those of the “Successor.”
(2)
Revenues for the years ended after December 31, 2017 reflect the application of Accounting Standards Codification, or ASC, Topic 606, Revenues from Contracts with Customers, or ASC Topic 606. The adoption of ASC Topic 606 impacts the presentation and comparability of NGLs product revenues between the years beginning after December 31, 2017 with those years ending on that date and all prior periods. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 of “Item 8. Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended 2019.
(3)
Operating income (loss) for the year ended December 31, 2019 reflects the application of ASC Topic 842, Leases, or ASC Topic 842. The adoption of ASC Topic 842 impacts the presentation and comparability of lease expense between the year ended December 31, 2019 with all prior periods. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 of “Item 8. Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended 2019.
(4)
Net income (loss) and Income (loss) attributable to common shareholders for the year ended December 31, 2018 and the period of January 1 through September 12, 2016 includes reorganization items resulting in income attributable to our bankruptcy proceedings of $3.3 million and $1.1 billion, respectively.
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CONTRIBUTED ASSETS SELECTED HISTORICAL FINANCIAL DATA
The following table shows selected historical financial information of the Contributed Assets for the periods indicated. The revenues and direct operating expenses information associated with the Contributed Assets for the years ended December 31, 2019 and 2018 are derived from the audited statements of revenues and direct operating expenses for the Contributed Assets included elsewhere in this proxy statement. The revenues and direct operating expenses information associated with the Contributed Assets for the nine months ended September 30, 2020 and 2019 are derived from the unaudited statements of revenues and direct operating expenses for the Contributed Assets that are included in this proxy statement.
The information set forth below is only a summary and is not necessarily indicative of the results of future operations of the Contributed Assets, nor does it include the effects of the Transactions. This information should be read together with the statements of revenues and direct operating expenses of the Contributed Assets and related notes included elsewhere in this proxy statement and the section entitled “Rocky Creek Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 
Nine Months Ended
September 30,
Year Ended
December 31,
 
2020
2019(1)
2019
2018(2)
 
(unaudited)
 
 
Statements of Revenues and Direct Operating Expenses
 
 
 
 
Revenues
$5,990,203
$    —
$2,175,686
$    —
Direct operating expenses
$1,202,581
$
$456,038
$
Excess of revenues over direct operating expenses
$4,787,622
$
$1,719,648
$
(1)
There were no producing wells during the nine months ended September 30, 2019.
(2)
There were no producing wells during 2018.
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SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The selected unaudited pro forma condensed consolidated financial information presented below reflects the pro forma effect of the Transactions. The unaudited condensed consolidated pro forma balance sheet as of September 30, 2020 gives effect to the Transactions, including the Equity Transaction, the Asset Transaction and the Refinancing Transactions (as defined in the section entitled “Unaudited Pro Forma Condensed Consolidated Financial Statements”), as if they had occurred on September 30, 2020. The unaudited condensed consolidated pro forma statements of operations for the nine months ended September 30, 2020 and the year ended December 31, 2019 both give effect to the Equity Transaction, the Asset Transaction and the Refinancing Transactions as if they had occurred on January 1, 2019. The Pro Forma Financial Statements are presented for illustrative purposes only to reflect the Equity Transaction, the Asset Transaction and the Refinancing Transactions and do not purport to represent what our financial position or results of operations would actually have been had the transactions and events described above occurred on the dates noted above, or to project our financial position or results of operations for any future periods. The Pro Forma Financial Statements are intended to provide information about the continuing impact of the Equity Transaction, the Asset Transaction and the Refinancing Transactions as if they had been consummated earlier. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable and are expected to have a continuing impact on our results of operations.
The following information should be read in conjunction with the Company’s consolidated financial statements and related notes and the statements of revenues and direct operating expense for the Contributed Assets. The Company's financial statements and notes are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020. The statements of revenues and direct operating expense for the Contributed Assets are included elsewhere in this proxy statement. See “Unaudited Pro Forma Condensed Consolidated Financial Statements” and “Where You Can Find Additional Information.”
 
Pro Forma
 
Nine Months Ended
September 30, 2020
Year Ended
December 31, 2019
(in thousands)
(unaudited)
Pro Forma Consolidated Statements of Operating Data:
 
 
Total revenues
$212,262
$ 473,392
Operating income (loss)
(260,251)
177,794
Net income (loss)
(168,936)
78,915
Net income (loss) attributable to noncontrolling interests
(99,672)
46,560
Net income (loss) attributable to Penn Virginia Corporation
(69,264)
32,355
Pro Forma Balance Sheet Data:
 
 
Property and equipment, net (full cost method)
$864,387
Total assets
982,061
Long-term debt, net
387,919
Total shareholders' equity
328,669
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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
The following table presents the Company’s historical and pro forma per share data as of and for the nine months ended September 30, 2020 and the year ended December 31, 2019. The pro forma per share data as of and for the nine months ended September 30, 2020 and the year ended December 31, 2019 is presented as if the Transactions had been completed on January 1, 2019.
Historical per share data as of and for the nine months ended September 30, 2020 and the year ended December 31, 2019 was derived from the Company’s historical financial statements for the respective periods. This information should be read together with the Company’s historical consolidated financial statements and related notes filed with the SEC, and that are incorporated into this proxy statement by reference. Please see the section entitled “Where You Can Find More Information” beginning on page 118.
Unaudited summary pro forma combined per share data as of and for the nine months ended September 30, 2020 and the year ended December 31, 2019 was derived and should be read in conjunction with the unaudited pro forma condensed consolidated financial data included in “Unaudited Pro Forma Condensed Consolidated Financial Statements” and the related notes thereto included in this proxy statement. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the Transactions had been completed as of the beginning of the period.
 
Nine Months Ended
September 30, 2020
Year Ended
December 31, 2019
Historical
 
 
Book value per share (at end of period)
$22.88
 
Cash dividends per share(1)
Income (loss) per share from continuing operations:
 
 
Basic
$(11.54)
$ 4.67
Diluted
(11.54)
4.67
Pro Forma
 
 
Book value per share (at end of period)
$21.62
 
Cash dividends per share(1)
Income (loss) per share from continuing operations:
 
 
Basic
$(4.57)
$2.14
Diluted
(4.57)
2.12
(1)
The Company is not currently paying dividends on the Common Stock and does not anticipate paying cash dividends on the Common Stock in the foreseeable future.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial statements and explanatory notes (the “Pro Forma Financial Statements”) have been derived from the historical consolidated financial statements of the Company and the historical revenues and direct operating expenses attributable to the Contributed Assets, and have been adjusted to reflect the following:
The consummation of the Asset Transaction pursuant to the Asset Agreement, including the proposed contribution of the Contributed Assets to the Partnership (or its designated affiliate) in exchange for the issuance of 4,959,000 Common Units to Rocky Creek at a price per unit of $7.74, or $38,382,660 in the aggregate (the “Unadjusted Purchase Price”), subject to adjustment as set forth in the Asset Agreement. In addition, Rocky Creek will acquire 49,590 Series A Preferred Stock at a price equal to the par value of the shares acquired, payable in cash. The Unadjusted Purchase Price and the related value ascribed to the Contributed Assets is subject to certain customary closing adjustments set forth in the Asset Agreement.
The consummation of the Equity Transaction pursuant to the Contribution Agreement, including the proposed:
Capital Contribution by JSTX, in the amount of $150.0 million to the Partnership in exchange for the issuance of 17,142,857 Common Units. In addition, the Company will issue to JSTX 171,428.57 shares of Series A Preferred Stock at a price equal to the par value of the shares acquired, payable in cash;
Conversion of the Company’s corporate subsidiaries, including Holdings, into limited liability companies which will be disregarded for U.S. federal income tax purposes; and
Contribution by the Company to the Partnership of all of the Company’s equity interests in Holdings following its Conversion into a limited liability company, in exchange for a number of Common Units equal to the number of shares of Common Stock outstanding as of the Closing Date.
The effectiveness of the Second Lien Credit Agreement Amendment and the use of the approximately $133 million of proceeds from the Capital Contribution (net of transaction fees and expenses related to the Equity Transaction and the Asset Transaction) to (i) make a prepayment of $50.0 million of outstanding advances under the Second Lien Credit Agreement, (ii) a prepayment of approximately $81.5 million of outstanding loans under the RBL and (iii) pay certain fees and expenses related to the Second Lien Credit Agreement (collectively, the “Refinancing Transactions”).
The Pro Forma Financial Statements should be read in conjunction with the Company’s consolidated financial statements and related notes and the audited Statements of Revenues and Direct Operating Expenses for the Contributed Assets. The Company’s financial statements and notes are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020. The audited Statements of Revenues and Direct Operating Expenses for the Contributed Assets are included elsewhere in this proxy statement.
The Transactions will result in a change of control of the Company with Juniper determined to be the accounting acquirer. Our existing shareholders are expected to control approximately 41% of our issued and outstanding voting power while Juniper is expected to control approximately 59% of our issued and outstanding voting power, and will have the right to designate a majority of the members of our Board. Juniper is currently not expected to elect, as permitted under accounting principles generally accepted in the United States (“GAAP”), to apply “push-down” accounting to its acquisition of the Company. As a result, the Company will continue to maintain its historical basis of accounting. The Contributed Assets, with an estimated fair value of approximately $38.4 million, will be reflected in the Company’s financial statements on the Closing Date at Juniper’s historical carrying values.
Following the completion of the Transactions, the Company will be a holding company whose principal asset will consist of approximately 41% of the outstanding Common Units that it acquires directly from the Partnership in conjunction with the Transactions. The remaining outstanding Common Units will be held by Juniper. Through its ownership of the General Partner, which will be the sole general partner of the Partnership, the Company will operate and control the business and affairs of the Partnership and its direct and indirect subsidiaries and, through the Partnership and its direct and indirect subsidiaries, conduct its business.
Certain of the historical amounts for the Contributed Assets have been reclassified to conform to the financial statement presentation of the Company. The unaudited condensed consolidated pro forma balance sheet as of September 30, 2020 gives effect to the Equity Transaction, the Asset Transaction and the Refinancing Transactions as if they had occurred on
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September 30, 2020. The unaudited condensed consolidated pro forma statements of operations for the nine months ended September 30, 2020 and the year ended December 31, 2019 both give effect to the Equity Transaction, the Asset Transaction and the Refinancing Transactions as if they had occurred on January 1, 2019.
The Pro Forma Financial Statements are presented for illustrative purposes only to reflect the Equity Transaction, the Asset Transaction and the Refinancing Transactions and do not purport to represent what our financial position or results of operations would actually have been had the transactions and events described above occurred on the dates noted above, or to project our financial position or results of operations for any future periods. The Pro Forma Financial Statements are intended to provide information about the continuing impact of the Equity Transaction, the Asset Transaction and the Refinancing Transactions as if they had been consummated earlier. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable and are expected to have a continuing impact on our results of operations. In the opinion of management, all adjustments necessary to present fairly the Pro Forma Financial Statements have been made. The historical carrying value of the Contributed Assets on the Closing Date may differ materially from the unaudited pro forma amounts included herein.
The Asset Transaction will be accounted for using the historical carrying value of the Contributed Assets on the Closing Date, subject to customary adjustments set forth in the Asset Agreement. See Note 2 – Contributed Assets.
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Penn Virginia Corporation
Unaudited Condensed Consolidated Pro Forma Balance Sheet
(in thousands except per share data)
 
As of September 30, 2020
 
 
Pro Forma Adjustments
 
 
Historical
Equity
Transaction
(a)
Asset
Transaction
(b)
Refinancing
Transactions
(c)
Pro Forma
Assets
 
 
 
 
 
Current assets
 
 
 
 
 
Cash and cash equivalents
$20,516
$132,925
$     —
$(132,925)
$20,516
Accounts receivable, net of allowance for credit losses
26,030
26,030
Derivative assets
50,414
50,414
Other current assets
12,836
12,836
Total current assets
109,796
132,925
(132,925)
109,796
Property and equipment, net (full cost method)
835,500
28,887
864,387
Derivative assets
2,619
2,619
Other assets
5,259
5,259
Total assets
$953,174
$132,925
$28,887
$(132,925)
$982,061
Liabilities and Shareholders' Equity
 
 
 
 
 
Current liabilities
 
 
 
 
 
Accounts payable and accrued expenses
$48,345
$
$
$
$48,345
Derivative liabilities
22,861
22,861
Total current liabilities
71,206
71,206
Other liabilities
8,443
15
8,458
Deferred income taxes
1,393
1,393
Derivative liabilities
5,542
5,542
Long-term debt, net
518,858
(130,939)
387,919
Redeemable Series A Preferred Stock of $0.01 par value - 221,019 issued pro forma
2
2
Redeemable noncontrolling interests
150,000
28,872
178,872
Shareholders' equity:
 
 
 
 
 
Preferred stock of $0.01 par value - 5,000,000 shares authorized
Common stock of $0.01 par value - 45,000,000 shares authorized; 15,200,435 issued
152
152
Paid-in capital
202,766
202,766
Retained earnings
144,877
(17,077)
(1,986)
125,814
Accumulated other comprehensive loss
(63)
(63)
Total shareholders' equity
347,732
(17,077)
(1,986)
328,669
Total liabilities, redeemable preferred stock, redeemable noncontrolling interests and stockholders' equity
$953,174
$132,925
$28,887
$(132,925)
$982,061
See accompanying notes to unaudited condensed consolidated pro forma financial statements.
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Penn Virginia Corporation
Unaudited Condensed Consolidated Pro Forma Statement of Operations
(in thousands except per share data)
 
For the Year Ended December 31, 2019
 
 
 
Pro Forma Adjustments
 
 
Historical
Contributed
Assets
Historical
Asset
Transaction
Refinancing
Transactions
Effect of
Noncontrolling
Interests
Pro Forma
Revenues
 
 
 
 
 
 
Crude oil
$434,713
$   2,055
$     —
$     —
$       —
$436,768
Natural gas liquids
16,589
51
16,640
Natural gas
17,733
70
17,803
Gain on sale of assets, net
5
5
Other revenues, net
2,176
2,176
Total revenues
471,216
2,176
473,392
Operating expenses
 
 
 
 
 
 
Lease operating
43,088
243
43,331
Gathering, processing and transportation
23,197
23,197
Production and ad valorem taxes
28,057
213
28,270
General and administrative
25,484
25,484
Depreciation, depletion and amortization
174,569
747(a)
175,316
Total operating expenses
294,395
456
747
295,598
Operating income (loss)
176,821
1,720
(747)
177,794
Other income (expense)
 
 
 
 
 
 
Interest expense
(35,811)
7,353(b)
(28,458)
Derivatives
(68,131)
(68,131)
Other, net
(153)
(153)
Income (loss) from continuing operations before income taxes and noncontrolling interests
72,726
1,720
(747)
7,353
81,052
Income tax benefit (expense)
(2,137)
(2,137)(d)
Net income (loss)
70,589
1,720
(747)
7,353
78,915
Less: Net income attributable to noncontrolling interests
(46,560)(c)
(46,560)
Net income (loss) from continuing operations attributable to Penn Virginia Corporation
$70,589
$1,720
$(747)
$7,353
$(46,560)
$32,355
Income from continuing operations per share:
 
 
 
 
 
 
Basic
$4.67
 
 
 
 
$2.14
Diluted
$4.67
 
 
 
 
$2.12
Weighted average shares outstanding:
 
 
 
 
 
 
Basic
15,110
 
 
 
 
15,110
Diluted
15,126
 
 
 
 
37,228
See accompanying notes to unaudited condensed consolidated pro forma financial statements.
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Penn Virginia Corporation
Unaudited Condensed Consolidated Pro Forma Statement of Operations
(in thousands except per share data)
 
For the Nine Months Ended September 30, 2020
 
 
 
Pro Forma Adjustments
 
 
Historical
Contributed
Assets
Historical
Asset
Transaction
Refinancing
Transactions
Effect of
Noncontrolling
Interests
Pro Forma
Revenues
 
 
 
 
 
 
Crude oil
$190,732
$   5,503
$     —
$     —
$       —
$196,235
Natural gas liquids
6,295
223
6,518
Natural gas
7,273
264
7,537
Gain on sale of assets, net
14
14
Other revenues, net
1,958
1,958
Total revenues
206,272
5,990
212,262
Operating expenses
 
 
 
 
 
 
Lease operating
27,901
732
28,633
Gathering, processing and transportation
16,797
16,797
Production and ad valorem taxes
13,152
470
13,622
General and administrative
23,801
23,801
Depreciation, depletion and amortization
114,891
3,271(a)
118,162
Impairments of oil and gas properties
271,498
271,498
Total operating expenses
468,040
1,202
3,271
472,513
Operating income (loss)
(261,768)
4,788
(3,271)
(260,251)
Other income (expense)
 
 
 
 
 
 
Interest expense
(24,213)
4,581(b)
(19,632)
Derivatives
109,879
109,879
Other, net
(42)
(42)
Income (loss) from continuing operations before income taxes and noncontrolling interests
(176,144)
4,788
(3,271)
4,581
(170,046)
Income tax benefit (expense)
1,110
1,110(d)
Net income (loss)
(175,034)
4,788
(3,271)
4,581
(168,936)
Less: Net loss attributable to noncontrolling interests
99,672(c)
99,672
Net income (loss) from continuing operations attributable to Penn Virginia Corporation
$(175,034)
$4,788
$(3,271)
$4,581
$99,672
$(69,264)
Loss from continuing operations per share:
 
 
 
 
 
 
Basic
$(11.54)
 
 
 
 
$(4.57)
Diluted
$(11.54)
 
 
 
 
$(4.57)
Weighted average shares outstanding:
 
 
 
 
 
 
Basic
15,168
 
 
 
 
15,168
Diluted
15,168
 
 
 
 
15,168
See accompanying notes to unaudited condensed consolidated pro forma financial statements.
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Penn Virginia Corporation
Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements
1. Basis of Presentation
The following are descriptions of the columns included in the accompanying unaudited Condensed Consolidated Pro Forma Financial Statements:
Historical – Represents our condensed consolidated </