UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
(Rule 14d-101)
Solicitation/Recommendation Statement
Under Section 14(d)(4) of the Securities Exchange Act of 1934
Pure Acquisition Corp. |
(Name of Subject Company) |
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Pure Acquisition Corp. |
(Name of Person Filing Statement) |
Warrants to Purchase Shares of Class A Common Stock, par value $0.0001 per Share |
74621Q 114 |
Jack Hightower Chief Executive Officer Pure Acquisition Corp. c/o HighPeak Pure Acquisition, LLC 421 W. 3rd Street, Suite 1000 Fort Worth, TX 76102 (817) 850-9200
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person Filing Statement) |
Copies to: |
G. Michael O’Leary Hunton Andrews Kurth LLP 600 Travis Street, Suite 4200 Houston, Texas 77002
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☐ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
ITEM 1. | SUBJECT COMPANY INFORMATION. |
Name and Address
The name of the subject company to which this Solicitation/Recommendation Statement on Schedule 14D-9 (together with any exhibits attached hereto, this “Statement”) relates is Pure Acquisition Corp., a Delaware corporation (the “Company”). The Company’s principal executive offices are located at 421 W. 3rd Street, Suite 1000, Fort Worth, Texas 76102. The Company’s telephone number at this address is (817) 850-9200.
Securities
This Statement relates to the Company’s outstanding Public Warrants (as defined below). As of December 3, 2019, there were issued and outstanding 20,452,000 Public Warrants held by persons other than the Offerors (as defined below), each of which was sold as part of the units issued in the Company’s initial public offering (“IPO”). All such Public Warrants have an exercise price of $11.50 per share.
Item 2. | IDENTITY AND BACKGROUND OF FILING PERSON. |
Name and Address
The Company is the person filing this Statement. The name, business address and business telephone number of the Company are set forth in Item 1 above.
Tender Offer
This Statement relates to an offer (the “Offer”) by HighPeak Energy Partners II, LP, a Delaware limited partnership (“HPEP II”), HighPeak Pure Acquisition, LLC, a Delaware limited liability company (“Sponsor”), HighPeak Energy Partners GP II, LP, a Delaware limited partnership (“HPEP II GP”), and Jack Hightower (together with HPEP II, Sponsor and HPEP II GP, the “Offerors”) to purchase 20,700,000 outstanding warrants (the “Public Warrants”) to purchase shares of Class A common stock, par value $0.0001 per share (“Class A Common Stock”), of the Company, each of which was sold as part of the units issued in the Company’s IPO, which closed on April 17, 2018, pursuant to a prospectus dated April 12, 2018 (the “IPO Prospectus”), at the tender offer price of $1.00 in cash per Public Warrant. The Offer is subject to the terms and conditions set forth in the Offer to Purchase, dated December 4, 2019 (together with any amendments or supplements thereto, the “Offer to Purchase”), a copy of which is filed with the Schedule TO as Exhibit (a)(1)(A), and in the related Letter of Transmittal (together with any amendments or supplements thereto, the “Letter of Transmittal”), a copy of which is filed with the Schedule TO as Exhibit (a)(1)(B). The Offer is described in a Tender Offer Statement on Schedule TO (together with exhibits and any amendments or supplements thereto, the “Schedule TO”), filed with the Securities and Exchange Commission (the “SEC”) on December 4, 2019.
Pursuant to the Sponsor’s obligation under a certain letter agreement (the “Letter Agreement”), dated as of April 18, 2018, entered into with the Company in connection with the Company’s IPO, the Sponsor or an affiliate thereof was required to commence a tender offer for the Public Warrants not owned by the Sponsor or its affiliates at a price of $1.00 per Public Warrant promptly after any occurrence of (a) the Company’s announcement of an initial Business Combination or (b) following the Company’s filing of a preliminary proxy statement with respect to a proposed amendment to the Company’s Charter that would affect the substance or timing of the Company’s obligation to redeem 100% of the outstanding public shares if the Company does not complete a business combination within 18 months from the closing of the IPO.
On November 27, 2019, the Company announced its entry into definitive agreements relating to an initial business combination. Specifically, on November 27, 2019, the Company entered into a business combination agreement, (as may be amended from time to time, the “HPK Business Combination Agreement”), dated November 27, 2019, by and among, the Company, HighPeak Energy, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“HighPeak Energy”), Pure Acquisition Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of HighPeak Energy (“MergerSub”), HighPeak Energy, LP, a Delaware limited partnership (“HighPeak I”), HighPeak Energy II, LP, a Delaware limited partnership (“HighPeak II”), HighPeak Energy III, LP, a Delaware limited partnership (“HighPeak III”), HPK Energy, LLC, a Delaware limited liability company (“HPK GP” and, together with HighPeak I, HighPeak II and HighPeak III, the “HPK Contributors”) and the general partner of HPK Energy, LP, a Delaware limited partnership (“HPK”), and an affiliate of Sponsor, and solely for the limited purposes specified therein, HighPeak Energy Management, LLC, a Delaware limited liability company (the “HPK Representative”), pursuant to which, among other things and subject to the terms and conditions contained therein, (a) MergerSub will merger with and into the Company, with the Company surviving as a wholly owned subsidiary of HighPeak Energy, (b) each outstanding share of Class A Common Stock and Class B common stock, par value $0.0001, of the Company will be converted into the right to receive one share of HighPeak Energy common stock (and cash in lieu of fractional shares, if any), other than certain shares held by Sponsor that will be forfeited prior to the merger, (c) the HPK Contributors will (A) contribute their limited partner interests in HPK to HighPeak Energy in exchange for HighPeak Energy common stock and the general partner interest in the HPK to either HighPeak Energy or a wholly owned subsidiary of HighPeak Energy in exchange for no consideration, and (B) directly or indirectly contribute certain loans with respect to which the Company or HighPeak Energy is the obligor, in exchange for shares of HighPeak Energy common stock, (d) all Sponsor Loans (as defined in the Registration Statement on Form S-4 related to the Company’s special meeting, filed with the SEC by HighPeak Energy on December 2, 2019, the “Business Combination Registration Statement”), if any, will be cancelled in connection with the HPK Closing (as defined in the Business Combination Registration Statement), and (e) following the consummation of the transactions contemplated by the Grenadier Contribution Agreement (as defined below), HighPeak Energy will cause HPK to merger with and into the Surviving Corporation (as successor to the Company) (as defined in the Business Combination Registration Statement) with all interest in HPK being cancelled in exchange for no consideration.
Additionally, the Company entered into a contribution agreement (as may be amended from time to time, the “Grenadier Contribution Agreement” and, together with the HPK Business Combination Agreement, the “Business Combination Agreements”), dated November 27, 2019, by and among Grenadier Energy Partners II, LLC, a Delaware limited liability company (“Grenadier”), HighPeak Energy Assets II, LLC, a Delaware limited liability company (“HighPeak Assets II”), the Company and HighPeak Energy, pursuant to which, among other things, Grenadier will contribute the Grenadier Assets (as defined in the Business Combination Registration Statement) to HighPeak Assets II in exchange for cash, shares of HighPeak Energy common stock and warrants to purchase shares of HighPeak Energy common stock, which transactions are expected to occur following HighPeak Energy’s indirect acquisition of HighPeak Assets II pursuant to the HPK Business Combination Agreement.
To comply with the terms of the Letter Agreement, the Offerors commenced the Offer on December 4, 2019, promptly following the Company’s announcement of the proposed initial business combination on November 27, 2019.
As set forth in the Schedule TO, the business address of the Company and the Offerors are set forth under Item 1 above.
The Company does not take any responsibility for the accuracy or completeness of any information set forth in the Schedule TO which is summarized herein or any failure by the Schedule TO Filing Persons to disclose events or circumstances that may have occurred and may affect the accuracy or completeness of such information.
ITEM 3. | PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. |
Conflicts of Interest
The information set forth in the section of the Offer to Purchase titled “The Offer – 5. Background and Purpose of the Offer – D. Interests of Directors and Executive Officers,” the sections of the Company’s Annual Report on Form 10-K filed with the SEC on February 8, 2019, titled “Item 11 – Executive Compensation,” “Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Item 13 – Certain Relationships and Related Transactions, and Director Independence,” and the sections of the Company’s Business Combination Registration Statement titled “Certain Relationships and Related Party Transactions”, “Questions and Answers About the Proposals for Pure Stockholders” and “Beneficial Ownership of Securities” are incorporated herein by reference.
ITEM 4. | THE SOLICITATION OR RECOMMENDATION. |
Solicitation or Recommendation
The Board of Directors of the Company has determined that it is unable to take a position, make a recommendation or express an opinion with respect to the Offer. The Board of Directors believes that the decision of a holder of Public Warrants (the “Holders”) regarding whether or not to tender its Public Warrants in the Offer is a personal investment decision based upon each individual Holder’s particular circumstances, which such circumstances the Board of Directors is unable to know or predict with respect to Individual Holders. The Board of Directors believes that each Holder’s decision regarding the Offer will be based on information available to such Holder, including the adequacy of the Offer price in light of the Holder’s own investment objectives, the Holder’s views as to the Company’s prospects and outlook, including as a result of the proposed business combination, and the factors considered by the Board of Directors, as described below.
Reasons for the Inability of the Company’s Board of Directors to Take a Position
In determining that it was unable to take a position with respect to the Offer, the Board of Directors considered a number of factors, including the following:
On April 12, 2018, the registration statement on Form S-1 (File No. 333-223845) for the IPO was declared effective by the SEC. In connection with the IPO, the Sponsor committed to offer or to cause an affiliate to offer to purchase the Public Warrants sold as part of the units issued in the IPO at a purchase price of $1.00 per Public Warrant in a proposed tender offer that would commence after the announcement of the Company’s initial business combination or the filing of a proxy statement or information statement with respect to a proposed amendment to the Company’s Charter that would affect the substance or timing of the Company’s obligation to redeem 100% of the Company’s public shares if the Company does not complete a business combination within 18 months of the completion of the IPO.
Pursuant to the Company’s obligations under the Letter Agreement, the Offerors have collectively agreed to conduct the Offer to purchase 20,452,000 outstanding Public Warrants held by persons other than the Offerors at a price of $1.00 per Public Warrant. The Offer is not conditioned upon any minimum number of Public Warrants being tendered.
The Offerors commenced the Offer on December 4, 2019, promptly following the filing of the Company’s announcement of the proposed business combination on November 27, 2019, pursuant to which the Offerors offered to purchase 20,452,000 Public Warrants held by persons other than the Offerors at a purchase price of $1.00 per Public Warrant, which offer would end at 11:59 p.m., Eastern Time, on January 17, 2020, or such later date to which the Offerors may extend the Offer.
In the event that a Holder does not tender its Public Warrants in this Offer, the Public Warrants will become exercisable 30 days after the consummation of an initial business combination of the Company for a period of five years thereafter. Alternatively, in the event that the Company were to liquidate upon a failure to consummate the initial business combination by February 21, 2020, Holders would receive $1.00 per Public Warrant to holders of Public Warrants other than the Sponsor and its affiliates. There will be no other redemption rights or liquidating distributions with respect to our warrants, which will expire if the Company fails to complete an initial business combination by February 21, 2020.
In addition, the Company’s Sponsor has agreed to contribute or cause an affiliate to contribute to the Company as a loan $0.033 for each share of the Company’s Class A Common Stock issued in the IPO that is not redeemed in connection with the stockholder vote to approve the business combination for each month (commencing on October 17, 2019 and on the 17th day of each subsequent calendar month thereafter) that is needed by the Company to complete a business combination from October 17, 2019 until February 21, 2020 (the “Contribution”).
The foregoing discussion of material factors considered by the Board of Directors is not intended to be exhaustive. In view of the variety of factors considered in connection with its evaluation of the Offer, the Board of Directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the factors summarized above in determining that it is unable to take a position with respect to the Offer. In addition, individual members of the Board of Directors may have assigned different weights to different factors.
Intent to Tender
After reasonable inquiry and to our knowledge, none of our directors, executive officers, affiliates or subsidiaries currently intends to tender any Public Warrants held of record or beneficially owned by such person pursuant to the Offer.
Item 5. | PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED. |
Except as set forth in the section of the Offer to Purchase entitled “The Offer—Fees and Expenses”, which is incorporated by reference herein, neither the Company nor the Offerors nor any person acting on their behalf has employed, retained or agreed to compensate any person to make solicitations or recommendations to the Holders with respect to the Offer.
Item 6. | INTEREST IN SECURITIES OF THE SUBJECT COMPANY. |
Except as set forth in (i) the section of the Business Combination Registration Statement entitled “Beneficial Ownership of Securities”, (ii) the section of the Company’s definitive proxy statement on Schedule 14A related to its special meeting, filed with the SEC by the Company on September 20, 2019 and Business Combination Registration Statement entitled “Certain Relationships and Related Party Transactions” and (iii) the section of the Offer to Purchase entitled “The Offer—Background and Purpose of the Offer,” which are incorporated by reference herein, neither the Company nor the Offerors, nor any of their directors, executive officers, affiliates or subsidiaries, has engaged in any transactions in the Public Warrants in the last 60 days.
Item 7. | PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. |
Except as described in this Statement, the Company is not undertaking or engaged in any negotiations in response to the Offer that relate to: (i) a tender offer or other acquisition of the Public Warrants by the Company, any of its subsidiaries, or any other person; (ii) any extraordinary transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (iii) any purchase, sale or transfer of a material amount of assets of the Company or any of its subsidiaries; or (iv) any material change in the present dividend rate or policy, or indebtedness or capitalization of the Company. Except as described in this Statement, to the knowledge of the Board of Directors and the Company, there are no transactions, board resolutions, agreements in principle or signed contracts entered into in response to the Offer which relate to one or more of the matters referred to in the preceding sentence.
Item 8. | ADDITIONAL INFORMATION. |
Not applicable.
Item 9. | EXHIBITS. |
The following exhibits are filed herewith:
Exhibit Number | Description |
(a)(1)(A) | |
(a)(1)(B) | |
(a)(1)(C) | |
(a)(1)(D) | |
(a)(1)(E) | |
(a)(2) | Not applicable. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(e)(1) | |
(e)(2) | |
(e)(3) | |
(e)(4) | |
(e)(5) | |
(e)(6) | |
(e)(7) | |
(e)(8) | |
(e)(9) | |
(e)(10) | |
(g) | Not applicable. |
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: December 13, 2019
| PURE ACQUISITION CORP. |
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| By: | /s/ Steven W. Tholen |
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| Name: Steven W. Tholen |
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| Title: Chief Financial Officer |
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