As filed with the Securities and Exchange Commission on November 22, 2019

Registration No. 333-234503

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 1

TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

PARSLEY ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		1311		46-4314192
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

303 Colorado Street, Suite 3000

Austin, Texas 78701

(737) 704-2300

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Colin Roberts

Executive Vice President—General Counsel

303 Colorado Street, Suite 3000

Austin, Texas 78701

(737) 704-2300

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

With a copy to:

 

Julian J. Seiguer, P.C. Sean T. Wheeler, P.C. Michael W. Rigdon Kirkland & Ellis LLP 609 Main Street Houston, Texas 77002 (713) 836-3600		Christopher I. Humber Executive Vice President, General Counsel & Secretary Jagged Peak Energy Inc. 1401 Lawrence Street, Suite 1800 Denver, Colorado 80202 (720) 215-3700		Douglas E. McWilliams Stephen M. Gill Vinson & Elkins L.L.P. 1001 Fannin Street Houston, Texas 77002 (713) 758-2222

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement is declared effective and upon completion of the merger described in the joint proxy statement/prospectus contained herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

Large accelerated filer		☒		Accelerated filer		☐
Non-accelerated filer		☐		Smaller reporting company		☐
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This joint proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

PRELIMINARY—SUBJECT TO COMPLETION, DATED NOVEMBER 22, 2019

 

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Stockholders of Parsley Energy, Inc. and Jagged Peak Energy Inc.:

On behalf of the boards of directors of Parsley Energy, Inc. (“Parsley”) and Jagged Peak Energy Inc. (“Jagged Peak”), we are pleased to enclose the accompanying joint proxy statement/prospectus relating to the acquisition of Jagged Peak by Parsley. We are requesting that you take certain actions as a Parsley or Jagged Peak stockholder.

On October 14, 2019, Parsley, Jackal Merger Sub, Inc., a wholly owned subsidiary of Parsley (“Merger Sub”), and Jagged Peak entered into an Agreement and Plan of Merger (as amended from time to time, the “merger agreement”), providing for (i) the merger of Merger Sub with and into Jagged Peak, with Jagged Peak surviving the merger (the “merger” and the surviving entity, the “surviving corporation”) and (ii) the subsequent merger of the surviving corporation with and into another wholly owned subsidiary of Parsley (“LLC Sub”), with LLC Sub continuing as the surviving entity as a wholly owned subsidiary of Parsley (the “subsequent merger,” together with the merger, the “integrated mergers”). In the merger, Jagged Peak stockholders will be entitled to receive, in exchange for each share of Jagged Peak common stock, par value $0.01 per share (“Jagged Peak common stock”), owned by them immediately prior to such merger, 0.447 shares of Parsley Class A common stock, par value $0.01 per share (“Parsley Class A common stock”), with cash paid in lieu of the issuance of any fractional shares, which we refer to as the merger consideration.

Parsley and Jagged Peak will each hold special meetings of their respective stockholders in connection with the proposed merger (respectively, the “Parsley special meeting” and “Jagged Peak special meeting”).

At the Parsley special meeting, holders of Parsley Class A common stock and Parsley Class B common stock, par value $0.01 per share, of Parsley (“Parsley Class B common stock” and, together with Parsley Class A common stock, “Parsley common stock”) (collectively, the “Parsley stockholders”), voting together as a single class, will be asked to vote on the proposal to approve the issuance of shares of Parsley Class A common stock to the holders of Jagged Peak common stock (the “Jagged Peak stockholders”) in connection with the merger pursuant to the terms of the merger agreement (the “share issuance proposal”). Approval of the share issuance proposal requires the affirmative vote of a majority of votes cast by Parsley stockholders entitled to vote thereon and present in person or represented by proxy at the Parsley special meeting.

In connection with the execution of the merger agreement, Bryan Sheffield, Parsley’s Executive Chairman and Chairman of the Parsley board, entered into a voting and support agreement with Jagged Peak (the “Sheffield Support Agreement”) with respect to all shares of Parsley common stock beneficially owned by Mr. Sheffield, and any additional shares of Parsley common stock of which Mr. Sheffield acquires record and/or beneficial ownership in between the date of the Sheffield Support Agreement and the termination of the Sheffield Support Agreement (the “Sheffield Support Agreement Shares”), wherein Mr. Sheffield agreed to vote all of the Sheffield Support Agreement Shares (i) in favor of the approval of the share issuance proposal and (ii) against specified actions that would discourage, delay or adversely affect the merger, including specified actions that contemplate

alternative transactions. As of the Parsley record date, Mr. Sheffield holds and is entitled to vote in the aggregate approximately      % of the issued and outstanding shares of Parsley common stock entitled to vote at the Parsley special meeting. For more information on the Sheffield Support Agreement, please see the section entitled “Parsley Special Meeting—Voting and Support Agreement with Bryan Sheffield.”

The Parsley special meeting will be held on January 9, 2020 at the JW Marriott Austin, 110 E. 2nd Street Austin, Texas 78701, at 9:00 A.M., Central Time. Parsley’s board of directors (the “Parsley board”) unanimously recommends that Parsley stockholders vote “FOR” the share issuance proposal.

At the Jagged Peak special meeting, Jagged Peak stockholders will be asked to vote on proposals to (i) approve and adopt the merger agreement (the “Jagged Peak merger proposal”) and (ii) approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Jagged Peak’s named executive officers that is based on or otherwise relates to the merger (the “Jagged Peak compensation proposal”). Approval of the Jagged Peak merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Jagged Peak common stock entitled to vote on the proposal. Approval of the Jagged Peak compensation proposal requires the affirmative vote of the holders of a majority of the Jagged Peak common stock entitled to vote thereon and present in person or represented by proxy at the Jagged Peak special meeting.

In connection with the execution of the merger agreement, Q-Jagged Peak Energy Investment Partners, LLC (“Q-Jagged Peak”), an affiliate of Quantum Energy Investment Partners (“Quantum”), entered into a voting and support agreement with Parsley (the “Quantum Support Agreement”) with respect to all shares of Jagged Peak common stock beneficially owned by Q-Jagged Peak, and any additional shares of Jagged Peak common stock of which Q-Jagged Peak acquires record and/or beneficial ownership in between the date of the Quantum Support Agreement and the termination of the Quantum Support Agreement (the “Quantum Support Agreement Shares”), wherein Q-Jagged Peak agreed to vote all of the Quantum Support Agreement Shares (i) in favor of the approval and adoption of the merger agreement and the transactions contemplated by the merger agreement, including the merger, subject to certain exceptions and (ii) against specified actions that would discourage, delay or adversely affect the merger, including specified actions that contemplate alternative transactions. As of the Jagged Peak record date, Q-Jagged Peak holds and is entitled to vote in the aggregate approximately                % of the issued and outstanding shares of Jagged Peak common stock entitled to vote at the Jagged Peak special meeting. Accordingly, as long as the Jagged Peak board does not change its recommendation with respect to such proposal, approval of the Jagged Peak merger proposal at the Jagged Peak special meeting is assured. In the event that the Jagged Peak board of directors (the “Jagged Peak board”) has changed its recommendation to its stockholders to approve and adopt the merger agreement, Q-Jagged Peak’s voting obligation is reduced to 34% of the total issued and outstanding shares of Jagged Peak common stock plus additional votes proportionate to the voting percentage of Jagged Peak’s other stockholders. For more information, please see the section entitled “Jagged Peak Special Meeting—Voting and Support Agreement with Q-Jagged Peak.”

The Jagged Peak special meeting will be held on January 9, 2020 at Jagged Peak’s principal executive offices at 1401 Lawrence Street, Suite 1800, Denver, Colorado 80202, at 8:00 A.M., Mountain Time. The Jagged Peak board unanimously recommends that Jagged Peak stockholders vote “FOR” the Jagged Peak merger proposal and “FOR” the Jagged Peak compensation proposal.

If the merger is completed, at the effective time, each issued and outstanding share of Jagged Peak common stock as of immediately prior to the effective time of the merger that is eligible to be converted into Parsley Class A common stock in accordance with the terms of the merger agreement will convert automatically into the right to receive 0.447 shares of Parsley Class A common stock (the “exchange ratio”), with cash paid in lieu of the issuance of fractional shares, if any. Although the number of shares of Parsley Class A common stock that Jagged Peak stockholders will receive in exchange for their shares of Jagged Peak common stock is fixed, the market value of the merger consideration will fluctuate with the market price of Parsley Class A common stock and will not be known at the time Jagged Peak stockholders vote to approve and adopt the merger agreement or at the time Parsley stockholders vote to approve the share issuance proposal. Based on the closing price of Parsley Class A common stock on the New York Stock Exchange (“NYSE”) on October 11, 2019, the last trading day before the public announcement of the parties entering into the merger agreement, the exchange ratio represented approximately $7.59 in value for each share of Jagged Peak common stock. Based on the closing

price of Parsley Class A common stock on the NYSE on                 , 2019, the last practicable trading day before the date of the accompanying joint proxy statement/prospectus, the exchange ratio represented approximately $                 in value for each share of Jagged Peak common stock. Based on the estimated number of shares of Parsley common stock and number of shares of Jagged Peak common stock, as well as the outstanding equity awards of the parties, that will be outstanding immediately prior to the consummation of the merger, we estimate that, upon consummation of the merger, Parsley stockholders as of immediately prior to the merger will hold approximately 77%, and Jagged Peak stockholders as of immediately prior to the merger will hold approximately 23%, of the issued and outstanding shares of Parsley common stock. We urge you to obtain current market quotations for Parsley Class A common stock (trading symbol “PE”) and Jagged Peak common stock (trading symbol “JAG”).

The obligations of Parsley and Jagged Peak to complete the merger are subject to the satisfaction or waiver of a number of conditions set forth in the merger agreement, a copy of which is attached as Annex A to the accompanying joint proxy statement/prospectus. The accompanying joint proxy statement/prospectus describes the Parsley special meeting and the proposal to be considered thereat, the Jagged Peak special meeting and the proposals to be considered thereat, the merger, and the documents and agreements related to the merger. It also contains or references information about Parsley and Jagged Peak and certain related agreements and matters. Please carefully read the entire accompanying joint proxy statement/prospectus, including “Risk Factors” beginning on page 34, for a discussion of the risks relating to the proposed merger. You also can obtain information about Parsley and Jagged Peak from documents that each has filed with the Securities and Exchange Commission (the “SEC”). Please see “Where You Can Find More Information” beginning on page 195 of the accompanying joint proxy statement/prospectus for how you may obtain such information.

Sincerely,

 

Matt Gallagher President and Chief Executive Officer Parsley Energy, Inc.		James J. Kleckner Chief Executive Officer and President Jagged Peak Energy Inc.

Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger described in the accompanying joint proxy statement/prospectus or determined if the accompanying joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is dated         , 2019 and is first being mailed to Parsley stockholders of record and Jagged Peak stockholders of record on or about         , 2019.

 

PARSLEY ENERGY, INC.

303 Colorado Street, Suite 3000

Austin, Texas 78701

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON JANUARY 9, 2020

Dear Stockholder:

You are cordially invited to attend the special meeting (the “Parsley special meeting”) of Parsley Energy, Inc. (“Parsley”), to be held at 9:00 A.M., Central Time, on January 9, 2020, at the JW Marriott Austin, 110 E. 2nd Street Austin, Texas 78701, for the following purpose:

To vote on a proposal to approve the issuance of shares of Parsley Class A common stock, par value $0.01 per share (“Parsley Class A common stock”), to stockholders of Jagged Peak Energy Inc. (“Jagged Peak”), in connection with the merger pursuant to the terms of the Agreement and Plan of Merger, dated as of October 14, 2019 (as amended from time to time, the “merger agreement”), by and among Parsley, Jagged Peak and Jackal Merger Sub, Inc. (the “share issuance” and such proposal, the “share issuance proposal”).

Parsley will transact no other business at the Parsley special meeting, except such business as may properly be brought before the Parsley special meeting or any adjournments or postponements thereof by or at the direction of the Parsley board of directors (the “Parsley board”) in accordance with Parsley’s amended and restated bylaws. This joint proxy statement/prospectus, of which this notice is a part, describes the proposal listed above in more detail. Please refer to the attached documents, including the merger agreement and all other annexes and any documents incorporated by reference, for further information with respect to the business to be transacted at the Parsley special meeting. You are encouraged to read the entire document carefully before voting. In particular, please see “The Merger” beginning on page 63 for a description of the transactions contemplated by the merger agreement, including the share issuance, and “Risk Factors” beginning on page 34 for an explanation of the risks associated with the merger and the other transactions contemplated by the merger agreement, including the share issuance.

Approval of the share issuance proposal by the affirmative vote of a majority of votes cast by the holders of Parsley Class A common stock and Parsley Class B common stock, par value $0.01 per share (together with the Parsley Class A common stock, “Parsley common stock,” and such holders, the “Parsley stockholders”), entitled to vote thereon and present in person or represented by proxy at the Parsley special meeting, is required to complete the merger, as contemplated pursuant to the merger agreement (the “merger”).

The Parsley board has fixed the close of business on November 25, 2019 as the record date for the determination of the Parsley stockholders entitled to receive notice of, and to vote at, the Parsley special meeting or any adjournments or postponements thereof. Only Parsley stockholders of record on the record date are entitled to receive notice of, and to vote at, the Parsley special meeting or any adjournments or postponements thereof. For additional information regarding the Parsley special meeting, please see “Parsley Special Meeting” beginning on page 48 of this joint proxy statement/prospectus, of which this notice is a part.

The Parsley board, at a meeting duly called and held, has by unanimous vote (i) determined that the merger agreement and the transactions contemplated thereby, including the share issuance, are fair to, and in the best interests of Parsley and the Parsley stockholders, (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the share issuance, and (iii) recommended that the Parsley stockholders approve the share issuance. The Parsley board unanimously recommends that Parsley stockholders vote “FOR” the share issuance proposal.

As a Parsley stockholder, you play an important role in our company by considering and taking action on these matters. We appreciate the time and attention you invest in making thoughtful decisions.

Please vote as promptly as possible, whether or not you plan to attend the Parsley special meeting. If your shares are held in the name of a broker, bank, or other nominee, please vote by following the instructions on the voting instruction form furnished by the broker, bank, or other nominee. If you hold your shares in your own name, please submit a proxy to vote your shares as promptly as possible by (i) visiting the internet site listed on the proxy card, (ii) calling the toll-free number listed on the proxy card, or (iii) signing and returning your proxy card by mail by using the self-addressed, stamped envelope provided. Submitting a proxy will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. Any eligible holder of Parsley common stock entitled to vote thereon and who is present at the Parsley special meeting may vote in person, thereby revoking any previous proxy. In addition, a proxy may also be revoked in writing before the Parsley special meeting in the manner described in this joint proxy statement/prospectus, of which this notice is a part.

If you have any questions concerning the share issuance proposal, the merger, or this joint proxy statement/prospectus, of which this notice is a part, would like additional copies, or need help voting your shares of Parsley common stock, please contact Parsley’s proxy solicitors:

Morrow Sodali LLC

470 West Avenue

Stamford, Connecticut 06902

PE@investor.morrowsodali.com

Telephone: (800) 662-5200

Brokers, banks and other nominees can call collect at: (203) 658-9400

 

By order of the Board of Directors,

 

Colin W. Roberts

Executive Vice President—General Counsel and Secretary

JAGGED PEAK ENERGY INC.

1401 Lawrence Street, Suite 1800

Denver, Colorado 80202

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON JANUARY 9, 2020

Dear Stockholder:

You are cordially invited to attend the special meeting of stockholders (the “Jagged Peak special meeting”) of Jagged Peak Energy Inc. (“Jagged Peak”), to be held at 8:00 A.M., Mountain Time, on January 9, 2020, at Jagged Peak’s principal executive offices at 1401 Lawrence Street, Suite 1800, Denver, Colorado 80202, for the following purposes:

 

1.

To vote on a proposal to approve and adopt the Agreement and Plan of Merger, dated as of October 14, 2019 (as amended from time to time, the “merger agreement”), by and among Parsley Energy, Inc. (“Parsley”), Jagged Peak and Jackal Merger Sub, Inc. (“Merger Sub”) (the “Jagged Peak merger proposal”); and

 

2.

To vote on a proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Jagged Peak’s named executive officers that is based on or otherwise relates to the merger (as defined below) (the “Jagged Peak compensation proposal”).

Jagged Peak will transact no other business at the Jagged Peak special meeting, except such business as may properly be brought before the Jagged Peak special meeting or any adjournments or postponements thereof by or at the direction of the Jagged Peak board of directors (the “Jagged Peak board”) in accordance with Jagged Peak’s amended and restated bylaws. This joint proxy statement/prospectus, of which this notice is a part, describes the proposals listed above in more detail. Please refer to the attached documents, including the merger agreement and all other annexes and any documents incorporated by reference, for further information with respect to the business to be transacted at the Jagged Peak special meeting. You are encouraged to read the entire document carefully before voting. In particular, please see “The Merger” beginning on page 63 for a description of the transactions contemplated by the merger agreement and “Risk Factors” beginning on page 34 for an explanation of the risks associated with the merger and the other transactions contemplated by the merger agreement.

Approval of the Jagged Peak merger proposal by the affirmative vote of the holders of a majority of the outstanding shares of Jagged Peak common stock, par value $0.01 per share (“Jagged Peak common stock”), entitled to vote on the proposal is required to complete the merger between Jagged Peak and Merger Sub, as contemplated pursuant to the merger agreement (the “merger”). Holders of Jagged Peak common stock (“Jagged Peak stockholders”) will also be asked to approve the Jagged Peak compensation proposal.

The Jagged Peak board has fixed the close of business on November 25, 2019 as the record date for the determination of the Jagged Peak stockholders entitled to receive notice of, and to vote at, the Jagged Peak special meeting or any adjournments or postponements thereof. The Jagged Peak stockholders of record as of the close of business on the record date are the only Jagged Peak stockholders that are entitled to receive notice of, and to vote at, the Jagged Peak special meeting or any adjournments or postponements thereof. For additional information regarding the Jagged Peak special meeting, please see “Jagged Peak Special Meeting” beginning on page 54 of this joint proxy statement/prospectus, of which this notice is a part.

The Jagged Peak board, at a meeting duly called and held, has by unanimous vote (i) declared that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best

interests of Jagged Peak and the Jagged Peak stockholders, (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger and (iii) recommended that the Jagged Peak stockholders approve and adopt the merger agreement and the transactions contemplated thereby, including the merger. The Jagged Peak board unanimously recommends that holders of Jagged Peak common stock vote “FOR” the Jagged Peak merger proposal and “FOR” the Jagged Peak compensation proposal.

As a Jagged Peak stockholder, you play an important role in our company by considering and taking action on these matters. We appreciate the time and attention you invest in making thoughtful decisions.

Please vote as promptly as possible, whether or not you plan to attend the Jagged Peak special meeting. If your shares are held in the name of a broker, bank, or other nominee, please vote by following the instructions on the voting instruction form furnished by the broker, bank, or other nominee. If you hold your shares in your own name, submit a proxy to vote your shares as promptly as possible by (i) visiting the internet site listed on the proxy card, (ii) calling the toll-free number listed on the proxy card, or (iii) submitting your proxy card by mail by using the self-addressed, stamped envelope provided. Submitting a proxy will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. Any eligible holder of Jagged Peak common stock entitled to vote thereon and who is present at the Jagged Peak special meeting may vote in person, thereby revoking any previous proxy. In addition, a proxy may also be revoked in writing before the Jagged Peak special meeting in the manner described in this joint proxy statement/prospectus, of which this notice is a part.

If you have any questions concerning the Jagged Peak merger proposal, the Jagged Peak compensation proposal, the merger or this joint proxy statement/prospectus, of which this notice is a part, would like additional copies, or need help voting your shares of Jagged Peak common stock, please contact Jagged Peak’s corporate secretary:

Jagged Peak Energy Inc.

1401 Lawrence Street, Suite 1800

Denver, Colorado 80202

(720) 215-3700

 

By Order of the Board of Directors,

Christopher I. Humber

Executive Vice President,

General Counsel & Secretary

RISK FACTORS

In deciding how to vote, Parsley stockholders and Jagged Peak stockholders, respectively, should carefully consider the following risk factors and all of the information contained in or incorporated by reference herein, including, but not limited to, the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” as well as Parsley’s and Jagged Peak’s other filings with the SEC incorporated herein by reference. Please see “Where You Can Find More Information.”

Risk Factors Relating to the Merger

Because the market price of Parsley Class A common stock will fluctuate, Jagged Peak stockholders cannot be sure of the value of the shares of Parsley Class A common stock they will receive in the merger. In addition, because the exchange ratio is fixed, the number of shares of Parsley Class A common stock to be received by Jagged Peak stockholders in the merger will not change between now and the time the merger is completed to reflect changes in the trading prices of Parsley Class A common stock or Jagged Peak common stock.

As a result of the merger, each eligible share of Jagged Peak common stock will be converted automatically into the right to receive 0.447 shares of Parsley Class A common stock, with cash paid in lieu of the issuance of any fractional shares of Parsley Class A common stock. The exchange ratio is fixed, which means that it will not change between now and the closing date, regardless of whether the market price of either Parsley Class A common stock or Jagged Peak common stock changes. Therefore, the value of the merger consideration will depend on the market price of Parsley Class A common stock at the effective time. The market price of Parsley Class A common stock has fluctuated since the date of the announcement of the parties’ entry into the merger agreement and will continue to fluctuate from the date of this joint proxy statement/prospectus to the date of the Jagged Peak special meeting, the date of the Parsley special meeting, the date the merger is completed and thereafter. The market price of Parsley Class A common stock, when received by Jagged Peak stockholders after the merger is completed, could be greater than, less than or the same as the market price of Parsley Class A common stock on the date of this joint proxy statement/prospectus or at the time of the Jagged Peak special meeting. Accordingly, you should obtain current stock price quotations for Parsley Class A common stock and Jagged Peak common stock before deciding how to vote or abstain from voting on any of the proposals described in this joint proxy statement/prospectus.

The market price for Parsley Class A common stock following the closing may be affected by factors different from those that historically have affected or currently affect Parsley Class A common stock and Jagged Peak common stock.

Upon completion of the merger, Jagged Peak stockholders will receive shares of Parsley Class A common stock. Parsley’s financial position may differ from its financial position before the completion of the merger, and the results of operations of the combined company may be affected by some factors that are different from those currently affecting the results of operations of Parsley and those currently affecting the results of operations of Jagged Peak. Accordingly, the market price and performance of Parsley Class A common stock is likely to be different from the performance of Jagged Peak common stock in the absence of the merger. In addition, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, Parsley Class A common stock, regardless of Parsley’s actual operating performance. For a discussion of the businesses of Parsley and Jagged Peak and important factors to consider in connection with those businesses, see the documents incorporated by reference herein and referred to in “Where You Can Find More Information.”

Parsley stockholders and Jagged Peak stockholders, in each case as of immediately prior to the merger, will have reduced ownership in the combined company.

Based on the number of issued and outstanding shares of Jagged Peak common stock as of November 20, 2019 and the number of outstanding Jagged Peak equity awards currently estimated to be payable in shares of

 

34

Parsley Class A common stock in connection with the merger, Parsley anticipates issuing approximately 95.4 million shares of Parsley Class A common stock pursuant to the merger agreement. The actual number of shares of Parsley Class A common stock to be issued pursuant to the merger agreement will be determined at the completion of the merger based on the number of shares of Jagged Peak common stock outstanding immediately prior to such time. The issuance of these new shares could have the effect of depressing the market price of Parsley Class A common stock, through dilution of earnings per share or otherwise. Any dilution of, or delay of any accretion to, Parsley’s earnings per share could cause the price of Parsley Class A common stock to decline or increase at a reduced rate.

Immediately after the completion of the merger, it is expected that Parsley stockholders as of immediately prior to the merger will own approximately 77%, and Jagged Peak stockholders as of immediately prior to the merger will own approximately 23%, of the issued and outstanding shares of Parsley common stock. As a result, Parsley’s current stockholders and Jagged Peak’s current stockholders will have less influence on the policies of the combined company than they currently have on the policies of Parsley and Jagged Peak, respectively.

Parsley and Jagged Peak must obtain certain regulatory approvals and clearances to consummate the merger, which, if delayed, not granted or granted with unacceptable conditions, could prevent, substantially delay or impair consummation of the merger, result in additional expenditures of money and resources or reduce the anticipated benefits of the merger.

The completion of the merger is subject to the receipt of antitrust clearance in the United States.

Under the HSR Act, the merger may not be completed until Notification and Report Forms have been filed with the FTC and the DOJ and the applicable waiting period has expired or been terminated. On November 13, 2019, Parsley and Jagged Peak received notice of early termination of the applicable waiting period under the HSR Act.

At any time before or after consummation of the merger, notwithstanding the early termination of the applicable waiting period under the HSR Act, the DOJ or the FTC, or any state, could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. Such action could include seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of the parties. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.

The merger is subject to a number of conditions to the obligations of both Parsley and Jagged Peak to complete the merger, which, if not fulfilled, or not fulfilled in a timely manner, may delay completion of the merger or result in termination of the merger agreement.

The respective obligations of each of Jagged Peak and Parsley to effect the merger are subject to the satisfaction at or prior to the effective time of the following conditions:

 

•

the approval of the Jagged Peak merger proposal by Jagged Peak stockholders must have been obtained;

 

•

the approval of the share issuance proposal by Parsley stockholders must have been obtained;

 

•

shares of Parsley Class A common stock that will be issued in the merger must have been authorized for listing on NYSE, upon official notice of issuance;

 

•

the registration statement on Form S-4, of which this joint proxy statement/prospectus forms a part, will have become effective under the Securities Act and no stop order suspending its effectiveness may be in effect;

 

•

no injunctions or decrees by any relevant governmental entity that prevent the merger may be outstanding;

 

35

•

all requisite regulatory approvals, both antitrust or otherwise and both U.S. and non-U.S., must have been obtained;

 

•

subject to certain exceptions and materiality standards provided in the merger agreement, the representations and warranties of the other party must be true and correct;

 

•

the other party must have performed or complied in all material respects with all of its obligations under the merger agreement; and

 

•

each party must have received a tax opinion from its respective counsel to the effect that the integrated mergers, taken together, will constitute a “reorganization” under the Code.

Many of the conditions to completion of the merger are not within either Parsley’s or Jagged Peak’s control, and neither company can predict when, or if, these conditions will be satisfied. If any of these conditions are not satisfied or waived prior to May 14, 2020, it is possible that the merger agreement may be terminated. Although Parsley and Jagged Peak have agreed in the merger agreement to use reasonable best efforts, subject to certain limitations, to complete the merger as promptly as practicable, these and other conditions to the completion of the merger may fail to be satisfied. In addition, satisfying the conditions to and completion of the merger may take longer, and could cost more, than Parsley and Jagged Peak expect. Neither Parsley nor Jagged Peak can predict whether and when these other conditions will be satisfied. Furthermore, the requirements for obtaining the required clearances and approvals could delay the completion of the merger for a significant period of time or prevent them from occurring. Any delay in completing the merger may adversely affect the cost savings and other benefits that Parsley and Jagged Peak expect to achieve if the merger and the integration of the companies’ respective businesses are completed within the expected timeframe. There can be no assurance that all required regulatory approvals will be obtained or obtained prior to the termination date.

Uncertainties associated with the merger may cause a loss of management personnel and other key employees of Jagged Peak, which could adversely affect the future business and operations of Parsley following the merger.

Parsley and Jagged Peak are dependent on the experience and industry knowledge of their officers and other key employees to execute their business plans. Parsley’s success after the merger will depend in part upon its ability to retain key management personnel and other key employees. Current and prospective employees of Jagged Peak may experience uncertainty about their roles within Parsley following the merger or other concerns regarding the timing and completion of the merger or the operations of Parsley following the merger, any of which may have an adverse effect on the ability of Jagged Peak to retain or attract key management and other key personnel. If Jagged Peak is unable to retain personnel, including Jagged Peak’s key management, who are critical to the future operations of the companies, Parsley and Jagged Peak could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment and training costs. In addition, the loss of key Jagged Peak personnel could diminish the anticipated benefits of the merger. No assurance can be given that Parsley, following the merger, will be able to retain or attract key management personnel and other key employees of Jagged Peak to the same extent that Parsley and Jagged Peak have previously been able to retain or attract their own employees.

The business relationships of Parsley and Jagged Peak may be subject to disruption due to uncertainty associated with the merger, which could have a material adverse effect on the results of operations, cash flows and financial position of Parsley or Jagged Peak pending and following the merger.

Parties with which Parsley or Jagged Peak do business may experience uncertainty associated with the merger, including with respect to current or future business relationships with Parsley or Jagged Peak following the merger. Parsley’s and Jagged Peak’s business relationships may be subject to disruption as customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners may attempt to delay or defer entering into new business relationships, negotiate changes in existing business relationships or consider

 

36

entering into business relationships with parties other than Parsley or Jagged Peak following the merger. These disruptions could have a material and adverse effect on the results of operations, cash flows and financial position of Parsley or Jagged Peak, regardless of whether the merger is completed, as well as a material and adverse effect on Parsley’s ability to realize the expected cost savings and other benefits of the merger. The risk, and adverse effect, of any disruption could be exacerbated by a delay in completion of the merger or termination of the merger agreement.

The merger agreement subjects Parsley and Jagged Peak to restrictions on their respective business activities prior to the effective time.

The merger agreement subjects Parsley and Jagged Peak to restrictions on their respective business activities prior to the effective time. The merger agreement obligates each of Parsley and Jagged Peak to generally conduct its businesses in the ordinary course until the effective time and to use its reasonable best efforts to (i) preserve substantially intact its present business organization, goodwill and assets, (ii) keep available the services of its current officers and employees and (iii) preserve its existing relationships with governmental entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with it. These restrictions could prevent Parsley and Jagged Peak from pursuing certain business opportunities that arise prior to the effective time and are outside the ordinary course of business. See “The Merger Agreement—Conduct of Business” for additional details.

Jagged Peak directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of the Jagged Peak stockholders generally.

In considering the recommendation of the Jagged Peak board that Jagged Peak stockholders vote in favor of the Jagged Peak merger proposal and the Jagged Peak compensation proposal, Jagged Peak stockholders should be aware of and take into account the fact that certain Jagged Peak directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of Jagged Peak stockholders generally. These interests include, among others, severance rights, rights to continuing indemnification and directors’ and officers’ liability insurance. See “The Merger—Interests of Certain Jagged Peak Directors and Executive Officers in the Merger” for a more detailed description of these interests. The Jagged Peak board was aware of and carefully considered these interests, among other matters, in evaluating the terms and structure, and overseeing the negotiation, of the merger, in approving the merger agreement and the transactions contemplated thereby, including the merger, and in recommending that the Jagged Peak stockholders adopt the merger agreement.

The merger agreement limits Parsley’s and Jagged Peak’s respective ability to pursue alternatives to the merger, may discourage other companies from making a favorable alternative transaction proposal and, in specified circumstances, could require Parsley or Jagged Peak to pay the other party a termination fee.

The merger agreement contains certain provisions that restrict each of Parsley’s and Jagged Peak’s ability to initiate, solicit, propose, knowingly encourage or knowingly facilitate any inquiry or the making of any proposal or offer that constitutes, or would reasonably be expected to result in, a competing proposal with respect to Parsley or Jagged Peak, as applicable, and Parsley and Jagged Peak have each agreed to certain terms and conditions relating to their ability to engage in, continue or otherwise participate in any discussions with respect to, provide a third party confidential information with respect to or enter into any an acquisition agreement with respect to certain unsolicited proposals that constitute or are reasonably likely to lead to a competing proposal. Further, even if the Parsley board or the Jagged Peak board changes, withdraws, modifies, or qualifies its recommendation with respect to the Parsley share issuance proposal or the Jagged Peak merger proposal, as applicable, unless the merger agreement has been terminated in accordance with its terms, both parties will still be required to submit the share issuance proposal and the Jagged Peak merger proposal, as applicable, to a vote at their respective special meetings. In addition, Parsley and Jagged Peak generally have an opportunity to offer to modify the terms of the merger agreement in response to any competing acquisition proposals (solely with

 

37

respect to Jagged Peak) or intervening events before the Jagged Peak board or Parsley board, respectively, may withdraw or qualify their respective recommendations. The merger agreement further provides that under specified circumstances, including after receipt of certain alternative acquisition proposals, Jagged Peak may be required to pay Parsley a cash termination fee equal to $57,435,000 or Parsley may be required to pay Jagged Peak a cash termination fee equal to $189,035,000. See “The Merger Agreement—Expenses and Termination Fees Relating to the Termination of the Merger Agreement” for additional details.

These provisions could discourage a potential third-party acquirer or other strategic transaction partner that might have an interest in acquiring all or a significant portion of Jagged Peak or Parsley from considering or pursuing an alternative transaction with either party or proposing such a transaction, even if it were prepared, in Jagged Peak’s case, to pay consideration with a higher per share value than the total value proposed to be paid or received in the merger. These provisions might also result in a potential third-party acquirer or other strategic transaction partner proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee or expense reimbursement that may become payable in certain circumstances.

Failure to complete the merger could negatively impact Parsley’s or Jagged Peak’s stock price and have a material adverse effect on their results of operations, cash flows and financial position.

If the merger is not completed for any reason, including as a result of failure to obtain all requisite regulatory approvals or if the Parsley stockholders or Jagged Peak stockholders fail to approve the applicable proposals, the ongoing businesses of Parsley and Jagged Peak may be materially adversely affected and, without realizing any of the benefits of having completed the merger, Parsley and Jagged Peak would be subject to a number of risks, including the following:

 

•

Parsley and Jagged Peak may experience negative reactions from the financial markets, including negative impacts on their respective stock prices;

 

•

Parsley and Jagged Peak and their respective subsidiaries may experience negative reactions from their respective customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners;

 

•

Parsley and Jagged Peak will still be required to pay certain significant costs relating to the merger, such as legal, accounting, financial advisor and printing fees;

 

•

Parsley or Jagged Peak may be required to pay a termination fee as required by the merger agreement;

 

•

the merger agreement places certain restrictions on the conduct of the respective businesses pursuant to the terms of the merger agreement, which may delay or prevent the respective companies from undertaking business opportunities that, absent the merger agreement, may have been pursued;

 

•

matters relating to the merger (including integration planning) require substantial commitments of time and resources by each company’s management, which may have resulted in the distraction of each company’s management from ongoing business operations and pursuing other opportunities that could have been beneficial to the companies; and

 

•

litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against Parsley or Jagged Peak to perform their respective obligations pursuant to the merger agreement.

If the merger is not completed, the risks described above may materialize and they may have a material adverse effect on Parsley’s or Jagged Peak’s results of operations, cash flows, financial position and stock prices.

The shares of Parsley Class A common stock to be received by Jagged Peak stockholders upon completion of the merger will have different rights from shares of Jagged Peak common stock.

Upon completion of the merger, Jagged Peak stockholders will no longer be stockholders of Jagged Peak. Instead, former Jagged Peak stockholders will become Parsley stockholders and while their rights as Parsley

 

38

stockholders will continue to be governed by the laws of the state of Delaware, their rights will be subject to and governed by the terms of the Parsley amended and restated certificate of incorporation and the Parsley amended and restated bylaws. The laws of the state of Delaware and terms of the Parsley amended and restated certificate of incorporation and the Parsley amended and restated bylaws are in some respects different than the terms of the Jagged Peak amended and restated certificate of incorporation and the Jagged Peak amended and restated bylaws, which currently govern the rights of Jagged Peak stockholders. See “Comparison of Stockholder Rights” for a discussion of the different rights associated with shares of Parsley Class A common stock and shares of Jagged Peak common stock.

Completion of the merger may trigger change in control or other provisions in certain agreements to which Jagged Peak is a party.

The completion of the merger may trigger change in control or other provisions in certain agreements to which Jagged Peak is a party. If Parsley and Jagged Peak are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements, or seeking monetary damages. Even if Parsley and Jagged Peak are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to Jagged Peak.

Parsley and Jagged Peak are expected to incur significant transaction costs in connection with the merger, which may be in excess of those anticipated by them.

Parsley and Jagged Peak have incurred and are expected to continue to incur a number of non-recurring costs associated with negotiating and completing the merger, combining the operations of the two companies and achieving desired synergies. These costs have been, and will continue to be, substantial and, in many cases, will be borne by Parsley and Jagged Peak whether or not the merger is completed. A substantial majority of non-recurring expenses will consist of transaction costs and include, among others, fees paid to financial, legal, accounting and other advisors, employee retention, severance and benefit costs, and filing fees. Parsley will also incur costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and other employment-related costs. Parsley and Jagged Peak will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in connection with the merger and the integration of the two companies’ businesses. While Parsley and Jagged Peak have assumed that a certain level of expenses would be incurred, there are many factors beyond their control that could affect the total amount or the timing of the expenses. The elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may not offset integration-related costs and achieve a net benefit in the near term, or at all. The costs described above and any unanticipated costs and expenses, many of which will be borne by Parsley or Jagged Peak even if the merger is not completed, could have an adverse effect on Parsley’s or Jagged Peak’s financial condition and operating results.

Lawsuits that have been filed or that may be filed in connection with the merger, the outcome of which are uncertain, could delay or prevent the consummation of the merger.

Following the public announcement of the merger, four putative stockholder lawsuits relating to the merger were filed. One action was filed in the United States District Court for the District of Delaware, another action was filed in the District Court, City and County of Denver, Colorado, a third action was filed in the United States District Court for the Southern District of New York, and a fourth action was filed in the United States District Court for the District of Colorado. The plaintiffs seek injunctive relief enjoining the merger, damages and costs and other remedies. Additional lawsuits in connection with the merger may be filed in the future.

The outcome of these lawsuits or any other lawsuits that may be filed challenging the merger is uncertain. If these lawsuits or any future lawsuit is successful in obtaining any order enjoining consummation of the merger, then such order may prevent the merger from being consummated, or from being consummated within the

 

39

expected time frame, and could result in substantial costs to Parsley and Jagged Peak. Any such injunction or delay in the merger being completed may adversely affect Parsley’s and Jagged Peak’s business, financial condition, results of operation and cash flows. Additionally, the defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect Parsley’s or Jagged Peak’s business, financial condition, results of operations and cash flows.

See the section entitled “The Merger—Litigation Relating to the Merger” for more information about litigation related to the merger that has been commenced prior to the date of this joint proxy statement/prospectus.

Litigation relating to the merger could result in an injunction preventing the completion of the merger and/or substantial costs to Parsley and Jagged Peak.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger, or other business combination agreements. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Parsley’s and Jagged Peak’s respective liquidity and financial condition.

Lawsuits that may be brought against Parsley, Jagged Peak or their respective directors could also seek, among other things, injunctive relief or other equitable relief, including a request to rescind parts of the merger agreement already implemented and to otherwise enjoin the parties from consummating the merger. One of the conditions to the closing of the merger is that no injunction by any court or other tribunal of competent jurisdiction has been entered and continues to be in effect and no law has been adopted or is effective, in either case that prohibits or makes illegal the closing of the merger. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the merger, that injunction may delay or prevent the merger from being completed within the expected timeframe or at all, which may adversely affect Parsley’s and Jagged Peak’s respective business, financial position and results of operation.

There can be no assurance that any of the defendants will be successful in the outcome of any pending or any potential future lawsuits. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect Parsley’s or Jagged Peak’s business, financial condition, results of operations and cash flows.

Risk Factors Relating to Parsley Following the Merger

Parsley may be unable to integrate the business of Jagged Peak successfully or realize the anticipated benefits of the merger.

The merger involves the combination of two companies that currently operate as independent public companies. The combination of two independent businesses is complex, costly and time consuming, and each of Parsley and Jagged Peak will be required to devote significant management attention and resources to integrating the business practices and operations of Jagged Peak into Parsley. Potential difficulties that Parsley and Jagged Peak may encounter as part of the integration process include the following:

 

•

the inability to successfully combine the business of Jagged Peak in a manner that permits Parsley to achieve, on a timely basis, or at all, the enhanced revenue opportunities and cost savings and other benefits anticipated to result from the merger;

 

•

complexities associated with managing the combined businesses, including difficulty addressing possible differences in operational philosophies and the challenge of integrating complex systems, technology, networks and other assets of each of the companies in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;

 

40

•

the assumption of contractual obligations with less favorable or more restrictive terms; and

 

•

potential unknown liabilities and unforeseen increased expenses or delays associated with the merger.

In addition, Parsley and Jagged Peak have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in:

 

•

diversion of the attention of each company’s management; and

 

•

the disruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies.

Any of these issues could adversely affect each company’s ability to maintain relationships with customers, suppliers, employees and other constituencies or achieve the anticipated benefits of the merger, or could reduce each company’s earnings or otherwise adversely affect the business and financial results of Parsley following the merger.

Parsley’s indebtedness following the merger may limit its financial flexibility and could lead to other adverse consequences.

As of September 30, 2019, Parsley had approximately $2.2 billion principal amount of outstanding indebtedness, consisting of amounts outstanding under its existing credit facility and its senior notes, and Jagged Peak had $715 million principal amount of outstanding indebtedness, consisting of amounts outstanding under its existing credit facility and its senior notes. In connection with the consummation of the merger, Parsley and Jagged Peak expect to repay in full the outstanding borrowings and terminate all outstanding commitments under Jagged Peak’s existing credit facility. In connection with the consummation of the merger, Parsley will also assume Jagged Peak’s senior notes. See “The Merger—Treatment of Indebtedness” for more details.

Parsley cannot assure you that its business will generate sufficient cash flow from operations, or that future borrowings will be available to Parsley under its credit facility or from other debt financing, in an amount sufficient to enable Parsley to service its indebtedness or to fund its other liquidity needs. If Parsley does not generate sufficient cash flow from operations to service its indebtedness, Parsley may have to undertake alternative financing plans, such as refinancing or restructuring its indebtedness, selling assets, or raising additional capital. Parsley’s ability to restructure or refinance its indebtedness will depend on the capital markets and its financial condition at such time. Any refinancing of Parsley’s indebtedness could be at higher interest rates and may require Parsley to comply with more onerous covenants, which could further restrict its business operations. Parsley’s inability to generate sufficient cash flow to service its indebtedness, or to refinance its obligations on commercially reasonable terms, would have an adverse effect, which could be material, on its business, financial position, and operating results. To the extent that Parsley will incur additional indebtedness, the risks associated with Parsley’s leverage, including its possible inability to service its debt, would increase.

Adverse changes in Parsley’s credit rating may affect Parsley’s borrowing capacity and borrowing terms.

Parsley’s outstanding debt is periodically rated by nationally recognized credit rating agencies. The credit ratings are based on Parsley’s operating performance, liquidity and leverage ratios, overall financial position, and other factors viewed by the credit rating agencies as relevant to Parsley’s industry and the economic outlook. Parsley’s credit rating may affect the amount of capital Parsley can access, as well as the terms of any financing Parsley obtains. Because Parsley relies in part on debt financing to fund growth, adverse changes in Parsley’s credit rating may have a negative effect on Parsley’s future growth.

Following the merger, the market price of Parsley Class A common stock may be depressed by the perception that Q-Jagged Peak may sell the shares of Class A common stock it will acquire at closing and for other reasons related to the merger.

Subject to applicable securities law, following their receipt of shares of Parsley Class A common stock in the merger, former Jagged Peak stockholders, including Q-Jagged Peak, may seek to sell the shares of Parsley

 

41

Class A common stock delivered to them, and the merger agreement contains no restriction on their ability to sell such shares of Parsley Class A common stock. In addition, concurrently with the execution and delivery of the merger agreement, Parsley and Q-Jagged Peak entered into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which, among other things and subject to certain restrictions, Parsley is required to file with the SEC a registration statement on Form S-3 registering for resale the shares of Parsley Class A common stock issued to Q-Jagged Peak in the merger and to conduct certain underwritten offerings upon Q-Jagged Peak’s request. The Registration Rights Agreement also provides Q-Jagged Peak with customary piggyback registration rights. The Registration Rights Agreement shall become effective at the effective time and shall terminate prior to effectiveness if the merger agreement is terminated prior to the consummation of the transactions contemplated thereby.

In addition to sales by Q-Jagged Peak, other stockholders may also seek to sell shares of Parsley Class A common stock held by them following, or in anticipation of, completion of the merger. These sales (or the perception that these sales may occur), coupled with the increase in the outstanding number of shares of Parsley Class A common stock, may affect the market for, and the market price of, shares of Parsley Class A common stock in an adverse manner.

Q-Jagged Peak will become a significant holder of Parsley Class A common stock following completion of the merger.

Upon completion of the merger, Q-Jagged Peak is expected to own approximately 17% of Parsley Class A common stock, representing approximately 16% of our combined voting power. As a result, Q-Jagged Peak will have the ability to influence Parsley’s management and affairs. Further, the existence of a new significant stockholder may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of Parsley’s other stockholders to approve transactions that they may deem to be in the best interests of Parsley.

So long as Q-Jagged Peak continues to control a significant amount of Parsley Class A common stock, it will continue to be able to influence all matters requiring stockholder approval. In any of these matters, the interests of Q-Jagged Peak may differ or conflict with the interests of other Parsley stockholders. In addition, Q-Jagged Peak and its affiliates may, from time to time, acquire interests in businesses that directly or indirectly compete with Parsley’s business or of Parsley’s significant existing or potential customers. Q-Jagged Peak and its affiliates may acquire or seek to acquire assets that Parsley seeks to acquire and, as a result, those acquisition opportunities may not be available to Parsley or may be more expensive for Parsley to pursue. Moreover, this concentration of stock ownership may also adversely affect the trading price of Parsley Class A common stock to the extent investors perceive a disadvantage in owning stock of a company with an significant stockholder.

The unaudited pro forma condensed combined financial statements, the unaudited summary pro forma combined oil, natural gas and NGLs reserve and production data and the unaudited prospective financial information prepared by Parsley and Jagged Peak included in this joint proxy statement/prospectus are based on a number of preliminary estimates and assumptions and the actual results of operations, cash flows and financial position of Parsley after the merger may differ materially.

The unaudited pro forma information and the unaudited prospective financial information in this joint proxy statement/prospectus is presented for illustrative purposes only, has been prepared based on available information and certain assumptions and estimates that Parsley and Jagged Peak believe are reasonable, and is not necessarily indicative of what Parsley’s actual financial position or results of operations would have been had the pro forma events been completed on the dates indicated. Further, Parsley’s actual results and financial position after the pro forma events occur may differ materially and adversely from the unaudited pro forma information included in this joint proxy statement/prospectus. The unaudited pro forma condensed combined financial statements have been prepared with the assumption that Parsley will be identified as the acquirer under GAAP and reflect adjustments based upon preliminary estimates of the fair value of assets to be acquired and liabilities to be assumed.

 

42

The synergies attributable to the merger may vary from expectations.

Parsley may fail to realize the anticipated benefits and synergies expected from the merger, which could adversely affect Parsley’s business, financial condition and operating results. The success of the merger will depend, in significant part, on Parsley’s ability to successfully integrate the acquired business, grow the revenue of the combined company and realize the anticipated strategic benefits and synergies from the combination. Parsley believes that the addition of Jagged Peak will complement Parsley’s strategy by providing operational and financial scale, increasing free cash flow, and enhancing Parsley’s corporate rate of return. However, achieving these goals requires, among other things, realization of the targeted cost synergies expected from the merger. This growth and the anticipated benefits of the transaction may not be realized fully or at all, or may take longer to realize than expected. Actual operating, technological, strategic and revenue opportunities, if achieved at all, may be less significant than expected or may take longer to achieve than anticipated. If Parsley is not able to achieve these objectives and realize the anticipated benefits and synergies expected from the merger within the anticipated timing or at all, Parsley’s business, financial condition and operating results may be adversely affected.

The future results of Parsley following the merger will suffer if Parsley does not effectively manage its expanded operations.

Following the merger, the size of the business of Parsley will increase significantly. Parsley’s future success will depend, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. Parsley may also face increased scrutiny from governmental authorities as a result of the significant increase in the size of its business. There can be no assurances that Parsley will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements or other benefits currently anticipated from the merger.

The merger may result in a loss of customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners and may result in the termination of existing contracts.

Following the merger, some of the customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners of Parsley or Jagged Peak may terminate or scale back their current or prospective business relationships with Parsley. Some customers may not wish to source a larger percentage of their needs from a single company or may feel that Parsley is too closely allied with one of their competitors. In addition, Parsley and Jagged Peak have contracts with customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners that may require Parsley or Jagged Peak to obtain consents from these other parties in connection with the merger, which may not be obtained on favorable terms or at all. If relationships with customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners are adversely affected by the merger, or if Parsley, following the merger, loses the benefits of the contracts of Parsley or Jagged Peak, Parsley’s business and financial performance could suffer.

The transactions in connection with the merger could trigger a limitation on the utilization of the historic U.S. net operating loss carryforwards of Jagged Peak.

Parsley’s ability to utilize U.S. net operating loss carryforwards (including any historic loss carryforwards of Jagged Peak) to reduce future taxable income following the consummation of the merger is subject to various limitations under the Code. Section 382 of the Code imposes such a limitation upon the occurrence of ownership changes resulting from issuances of a company’s stock or the sale or exchange of such company’s stock by certain stockholders if, as a result, there is an aggregate change of more than 50% in the beneficial ownership of such company’s stock by such stockholders during any three-year period. Parsley and Jagged Peak believe that the transactions in connection with the merger, if consummated, will not result in an ownership change with respect to Parsley but will result in an ownership change with respect to Jagged Peak, which could trigger a

 

43

limitation on Parsley’s ability to utilize any historic loss carryforwards of Jagged Peak following the consummation of the merger, based on information currently available. The limitation with respect to such loss carryforwards of Jagged Peak generally would be equal to (i) the fair market value of Jagged Peak’s equity multiplied by (ii) a percentage approximately equivalent to the yield on long-term tax-exempt bonds during the month in which the ownership change occurs. In addition, the limitation would be increased if there are recognized built-in gains during any post-change year, but only to the extent of any net unrealized built-in gains inherent in the assets sold. Any such limitation could cause some of such loss carryforwards from prior to 2018 to expire before Parsley would be able to utilize them to reduce taxable income in future periods.

Following the completion of the merger, Parsley may incorporate Jagged Peak’s hedging activities into Parsley’s business, and Parsley may be exposed to additional commodity price risks arising from such hedges.

To mitigate its exposure to changes in commodity prices, Jagged Peak hedges oil prices from time to time, primarily through the use of certain derivative instruments. If Parsley assumes existing Jagged Peak hedges, Parsley will bear the economic impact of all of Jagged Peak’s current hedges following the completion of the merger. Actual crude oil prices may differ from the combined company’s expectations and, as a result, such hedges may or may not have a negative impact on Parsley’s business.

Parsley’s amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Parsley stockholders, which could limit Parsley stockholders’ ability to obtain a favorable judicial forum for disputes with Parsley or its directors, officers, or other employees.

Parsley’s amended and restated certificate of incorporation provides that, unless Parsley consents in writing to the selection of an alternative forum, the sole and exclusive forum shall be the Court of Chancery of the State of Delaware for (i) any derivative action or proceeding brought on behalf of Parsley, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of Parsley to Parsley or Parsley’s stockholders, (iii) any action asserting a claim against Parsley or any director or officer or other employee of Parsley arising pursuant to any provision of the DGCL, the amended and restated certificate of incorporation or Parsley’s amended and restated bylaws, or (iv) any action asserting a claim against Parsley or any director or officer or other employee of Parsley governed by the internal affairs doctrine, in each such case subject to said court of chancery having personal jurisdiction over the indispensable parties named as defendants therein.

Parsley’s exclusive forum provision is not intended to apply to claims arising under the Securities Act or the Exchange Act. To the extent the provision could be construed to apply to such claims, there is uncertainty as to whether a court would enforce the forum selection provision with respect to such claims, and in any event, Parsley’s stockholders would not be deemed to have waived Parsley’s compliance with federal securities laws and the rules and regulations thereunder.

Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of Parsley is deemed to have received notice of and consented to the foregoing forum selection provision. This provision may limit Parsley stockholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with Parsley or its directors, officers, or other employees, which may discourage such lawsuits. Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, Parsley may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect its business, financial condition, prospects, or results of operations. Please see “Comparison of Stockholder Rights—Exclusive Forum.”

Other Risk Factors Relating to Parsley and Jagged Peak

As a result of entering into the merger agreement, Parsley’s and Jagged Peak’s businesses are and will be subject to the risks described above. In addition, Parsley and Jagged Peak are, and following completion of the

 

44

merger, Parsley will be, subject to the risks described in Parsley’s and Jagged Peak’s Annual Report on Form 10-K for the year ended December 31, 2018 as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” for the location of information incorporated by reference into this joint proxy statement/prospectus.

 

45

INFORMATION ABOUT PARSLEY

Parsley is an independent oil and natural gas company focused on the acquisition, development, exploration and production of unconventional oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive production histories, long-lived reserves and historically high drilling success rates. Parsley’s properties are located in two sub areas of the Permian Basin, the Midland and Delaware Basins, where, given the associated returns, it focuses predominantly on horizontal development drilling.

Parsley is a Delaware corporation with principal executive offices located at 303 Colorado Street, Suite 3000, Austin, Texas 78701. Its telephone number at that address is (737) 704-2300. Parsley Class A common stock is listed on the NYSE under the symbol “PE.” Additional information about Parsley and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

 

46

INFORMATION ABOUT JAGGED PEAK

Jagged Peak is an independent oil and natural gas exploration and production company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the southern Delaware Basin. Prior to Jagged Peak’s incorporation in the state of Delaware in September 2016 and subsequent initial public offering in January 2017, Jagged Peak was originally formed as a limited liability company in April 2013 by an affiliate of Quantum and former members of Jagged Peak’s management team at the time.

Jagged Peak’s principal executive offices are located at 1401 Lawrence Street, Suite 1800, Denver, Colorado 80202. Its telephone number at that address is (720) 215-3700. Jagged Peak’s common stock is listed on the NYSE under the symbol “JAG.” Additional information about Jagged Peak and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

 

47

PARSLEY SPECIAL MEETING

General

This joint proxy statement/prospectus is being provided to Parsley stockholders as part of a solicitation of proxies by the Parsley board for use at the Parsley special meeting and at any adjournments or postponements of such special meeting. This joint proxy statement/prospectus provides Parsley stockholders with important information about the Parsley special meeting and should be read carefully in its entirety.

Date, Time and Place of the Parsley Special Meeting

The Parsley special meeting will be held on January 9, 2020 at 9:00 A.M., Central Time, at the JW Marriott Austin, 110 E. 2nd Street Austin, Texas 78701.

Purpose of the Parsley Special Meeting

The Parsley special meeting is being held to consider and vote on a proposal to approve the issuance of shares of Parsley Class A common stock to stockholders of Jagged Peak in connection with the merger pursuant to the terms of the merger agreement, which is referred to as the share issuance proposal.

Recommendation of the Parsley Board

The Parsley board unanimously recommends that Parsley stockholders vote “FOR” the share issuance proposal.

This joint proxy statement/prospectus contains important information regarding this proposal and factors that Parsley stockholders should consider when deciding how to cast their votes. Parsley stockholders are encouraged to read the entire document carefully, including the annexes to and documents incorporated by reference into this joint proxy statement/prospectus, for more detailed information regarding the merger agreement, including the share issuance proposal.

Voting by Directors and Executive Officers

On the Parsley record date, there were            shares of Parsley Class A common stock and            shares of Parsley Class B common stock outstanding. On the Parsley record date, Parsley directors and executive officers, and their affiliates, as a group, beneficially owned and were entitled to vote            shares of Parsley Class A common stock and            shares of Parsley Class B common stock, or approximately            % of the issued and outstanding shares of Parsley common stock. Although none of them has entered into any agreement obligating them to do so (other than Mr. Bryan Sheffield, Parsley’s Executive Chairman and Chairman of the Parsley board, pursuant to the Sheffield Support Agreement) as a director or executive officer of Parsley, Parsley currently expects that all of its directors and executive officers will vote their shares “FOR” the share issuance proposal.

Voting and Support Agreement with Bryan Sheffield

In connection with the execution of the merger agreement, Mr. Sheffield entered into the Sheffield Support Agreement with respect to the Sheffield Support Agreement Shares. As of the Parsley record date, Mr. Sheffield holds and is entitled to vote in the aggregate approximately            % of the issued and outstanding shares of Parsley common stock entitled to vote at the Parsley special meeting.

Pursuant to the Sheffield Support Agreement, Mr. Sheffield has agreed to vote all of the Sheffield Support Agreement Shares (i) in favor of the approval of the share issuance proposal and (ii) against specified actions that would discourage, delay or adversely affect the merger, including specified actions that contemplate alternative transactions. Under the Sheffield Support Agreement, Mr. Sheffield has granted to Jagged Peak an irrevocable proxy to vote the Sheffield Support Agreement Shares as provided above. Subject to certain exceptions, the Sheffield Support Agreement restricts Mr. Sheffield from transferring Parsley common stock until the termination of the Sheffield Support Agreement.

 

48

The Sheffield Support Agreement, including the irrevocable proxy granted thereunder, will terminate upon the earlier of (i) the date the merger agreement is validly terminated in accordance with its terms or (ii) the effective time. The Sheffield Support Agreement is attached to this joint proxy statement/prospectus as Annex E.

Attendance at the Parsley Special Meeting

Only Parsley stockholders of record on the Parsley record date, beneficial owners of Parsley common stock on the Parsley record date, holders of valid proxies for the Parsley special meeting, and invited guests of Parsley may attend the Parsley special meeting.

All attendees should be prepared to present government-issued photo identification (such as a driver’s license or passport) for admittance. The additional items, if any, that attendees must bring depend on whether they are Parsley stockholders of record, beneficial owners of Parsley common stock, or proxy holders.

 

•

A Parsley stockholder who holds shares of Parsley common stock directly registered in such stockholder’s name with Parsley’s transfer agent, American Stock Transfer & Trust Company, LLC (a “Parsley stockholder of record”), who wishes to attend the Parsley special meeting in person should bring government-issued photo identification.

 

•

A beneficial owner of Parsley common stock who wishes to attend the Parsley special meeting in person should bring:

 

•

government-issued photo identification; and

 

•

proof of beneficial ownership as of the Parsley record date (e.g., a letter from the bank, broker, or other nominee that is the record owner of such beneficial owner’s shares, a brokerage account statement, or the voting instruction form provided by the bank, broker, or other nominee).

 

•

A proxy holder who wishes to attend the Parsley special meeting in person should bring:

 

•

government-issued photo identification;

 

•

the validly executed proxy naming such person as the proxy holder, signed by the Parsley stockholder of record; and

 

•

proof of the signing stockholder’s record ownership as of the Parsley record date.

No cameras, recording equipment or other electronic devices will be allowed in the meeting room. Failure to provide the requested documents at the door or failure to comply with the procedures for the Parsley special meeting may prevent stockholders from being admitted to the Parsley special meeting.

Record Date

The Parsley board has fixed the close of business on November 25, 2019 as the Parsley record date for the determination of the Parsley stockholders entitled to receive notice of, and to vote at, the Parsley special meeting. The Parsley stockholders of record on the Parsley record date are the only Parsley stockholders that are entitled to receive notice of, and to vote at, the Parsley special meeting or any adjournments or postponements of the Parsley special meeting.

Outstanding Shares as of Record Date and Voting Rights of Parsley Stockholders

On the Parsley record date, there were                shares of Parsley Class A common stock and                shares of Parsley Class B common stock outstanding, held by                 and                  holders of record, respectively. Each share of Parsley common stock entitles its holder of record to one vote at the Parsley special meeting.

 

49

A complete list of registered Parsley stockholders entitled to vote at the Parsley special meeting will be available for inspection at Parsley’s principal executive offices at 303 Colorado Street, Suite 3000, Austin, Texas 78701, during regular business hours for a period of no less than ten days before the Parsley special meeting and at the place of the Parsley special meeting during the meeting.

Quorum; Abstentions and Broker Non-Votes

In order for business to be conducted at the Parsley special meeting, a quorum must be present. A quorum at the Parsley special meeting requires the presence of the holders of a majority of the total issued and outstanding shares of Parsley common stock entitled to vote at the Parsley special meeting, represented in person or by proxy. Abstentions will be counted for purposes of determining whether there is a quorum at the Parsley special meeting. Shares represented by broker non-votes will not be considered present and entitled to vote at the Parsley special meeting for the purpose of determining the presence of a quorum.

Adjournment

If a quorum is not present or represented or if there are not sufficient votes for the approval of the share issuance proposal, Parsley expects that the Parsley special meeting will be adjourned by the chairman of the Parsley special meeting to solicit additional proxies. At any subsequent reconvening of the Parsley special meeting at which a quorum shall be present or represented, all proxies will be voted in the same manner as the manner in which such proxies would have been voted at the original convening of the Parsley special meeting, except for any proxies that have been validly revoked or withdrawn prior to the subsequent meeting.

Vote Required

Approval of the share issuance proposal requires the affirmative vote of a majority of votes cast by Parsley stockholders entitled to vote thereon and present in person or represented by proxy at the Parsley special meeting. Abstentions are considered votes cast and will have the same effect as a vote “against” the share issuance proposal. The failure of any Parsley stockholder to submit a vote (e.g., by not submitting a proxy and not voting in person) will not be counted in determining the votes cast in connection with the share issuance proposal and will therefore have no effect on the outcome of the share issuance proposal. Because the share issuance proposal is non-routine, banks, brokers, and other nominees do not have discretionary authority to vote on the share issuance proposal and will not be able to vote on the share issuance proposal absent instructions from the beneficial owner. The failure of a beneficial owner to provide voting instructions to its bank, broker, or other nominee will result in the applicable shares not being counted in determining the votes cast in connection with the share issuance proposal, and will therefore have no effect on the outcome of the share issuance proposal.

An abstention occurs when the beneficial owner of shares, or a bank, broker or other nominee holding shares for a beneficial owner, is present, in person or by proxy, and entitled to vote at the meeting, but such person refrains from voting as to a particular proposal by expressly marking the “abstain” box on the voting instruction form or ballot.

A broker non-vote occurs when a broker or other nominee returns a valid proxy card without voting on such proposal because they did not receive voting instructions from the street name holder and do not have discretionary authority to vote the shares on a particular proposal. Under applicable rules, banks, brokers, and other nominees have discretionary voting power with respect to matters that are considered routine. Shares represented by broker non-votes, however, will not be voted on the share issuance proposal since the proposal is considered non-routine and therefore the bank, broker, or other nominee has no discretionary authority to vote on such proposal. Such shares will be disregarded in the calculation of “votes cast” with respect to the proposals included herein and therefore will have no effect on the outcome of such proposals.

 

50

How to Vote

Parsley stockholders of record on the Parsley record date may have their shares of Parsley common stock voted by submitting a proxy or may vote in person at the Parsley special meeting by following the instructions provided on the enclosed proxy card. Parsley recommends that Parsley stockholders entitled to vote submit a proxy prior to the Parsley special meeting even if they plan to attend the Parsley special meeting.

Parsley stockholders of record may vote in one of the following ways:

 

•

Internet: Parsley stockholders of record may submit their proxy over the internet at the web address shown on their proxy card or voting instruction form. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m., Eastern Time (10:59 p.m., Central Time), on January 8, 2020. Stockholders will be given an opportunity to confirm that their voting instructions have been properly recorded. Parsley stockholders who submit a proxy this way need not send in their proxy card.

 

•

Telephone: Parsley stockholders of record may submit their proxy by calling the toll-free telephone number shown on their proxy card or voting instruction form. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m., Eastern Time (10:59 p.m., Central Time), on January 8, 2020. Easy-to-follow voice prompts will guide stockholders through the voting and allow them to confirm that their instructions have been properly recorded. Parsley stockholders who submit a proxy this way need not send in their proxy card.

 

•

Mail: Parsley stockholders of record may submit their proxy by properly completing, signing, dating and mailing their proxy card or voting instruction form in the self-addressed, stamped envelope (if mailed in the United States) included with this joint proxy statement/prospectus. Parsley stockholders who vote this way should mail the proxy card early enough so that it is received prior to the closing of the polls at the Parsley special meeting.

 

•

In Person: Parsley stockholders of record may vote in person at the Parsley special meeting or by sending a representative with an acceptable proxy that has been signed and dated; attendance at the Parsley special meeting will not, however, in and of itself constitute a vote or a revocation of a prior proxy.

Parsley stockholders are encouraged to submit a proxy promptly. Each valid proxy received in time will be voted at the Parsley special meeting according to the choice specified, if any. Executed but uninstructed proxies (i.e., proxies that are properly signed, dated and returned but are not marked to tell the proxies how to vote) will be voted in accordance with the recommendations of the Parsley board.

Parsley stockholders who hold their shares of Parsley common stock beneficially in “street name” and wish to submit a proxy must provide instructions to the bank, broker, or other nominee that holds their shares of record as to how to vote their shares with respect to the share issuance proposal. Parsley stockholders who hold their shares of Parsley common stock beneficially and wish to vote in person at the Parsley special meeting must obtain proxies issued in their own names (known as a “legal proxy”).

Proxies and Revocation

Parsley stockholders of record may revoke their proxies at any time before their shares of Parsley common stock are voted at the Parsley special meeting in any of the following ways:

 

•

sending a written notice of revocation to Parsley at 303 Colorado Street, Suite 3000, Austin, Texas 78701, Attention: Corporate Secretary, which must be received before their shares are voted at the Parsley special meeting;

 

•

properly submitting a new, later-dated proxy card, which must be received by 11:59 p.m., Eastern Time (10:59 p.m., Central Time), on January 8, 2020 (in which case only the later-dated proxy is counted and the earlier proxy is revoked);

 

51

•

submitting a proxy via the internet or by telephone at a later date, which must be received by 11:59 p.m., Eastern Time (10:59 p.m., Central Time), on January 8, 2020 (in which case only the later-dated proxy is counted and the earlier proxy is revoked); or

 

•

attending the Parsley special meeting and voting in person; attendance at the Parsley special meeting will not, however, in and of itself, constitute a vote or revocation of a prior proxy.

Beneficial owners of shares of Parsley common stock may change their voting instruction only by submitting new voting instructions to the banks, brokers, or other nominees that hold their shares of record or by requesting a “legal proxy” from such bank broker, or other nominee and voting in person at the Parsley special meeting.

Solicitation of Proxies

Parsley will pay for the proxy solicitation costs related to the Parsley special meeting. In addition to sending and making available these materials, some of Parsley’s directors, officers and other employees may solicit proxies by contacting Parsley stockholders by telephone, by mail, by e-mail or in person. Parsley stockholders may also be solicited by news releases issued by Parsley and/or Jagged Peak, postings on Parsley’s or Jagged Peak’s websites and advertisements in periodicals. None of Parsley’s directors, officers or employees will receive any extra compensation for their solicitation services. Parsley has also retained Morrow Sodali LLC as its proxy solicitor to assist in the solicitation of proxies. For these proxy solicitation services, Morrow Sodali LLC will receive an estimated fee of approximately $25,000, plus reasonable out-of-pocket expenses and fees for any additional services. Parsley will also reimburse banks, brokers, and other nominees for their expenses in sending proxy solicitation materials to the beneficial owners of shares of Parsley common stock and obtaining their proxies.

No Dissenters’ or Appraisal Rights

Under the DGCL, as well as the governing documents of Parsley, Parsley stockholders are not entitled to dissenters’ or appraisal rights in connection with the merger or the transactions contemplated by the merger.

Other Matters

At this time, Parsley knows of no other matters to be submitted at the Parsley special meeting.

Householding of Special Meeting Materials

Unless Parsley has received contrary instructions, Parsley may send a single copy of this joint proxy statement/prospectus and notice to any household at which two or more stockholders reside if Parsley believes the stockholders are members of the same family. Each stockholder in the household will continue to receive a separate proxy card. This process, known as “householding,” reduces the volume of duplicate information received at a household and helps to reduce Parsley’s expenses.

Questions and Additional Information

Parsley stockholders may contact Parsley’s proxy solicitor with any questions about the share issuance proposal or how to vote or to request additional copies of any materials at:

Morrow Sodali LLC

470 West Avenue

Stamford, Connecticut 06902

PE@investor.morrowsodali.com

Telephone: (800) 662-5200

Banks, brokers and other nominees can call collect at: (203) 658-9400

 

52

PARSLEY PROPOSAL—SHARE ISSUANCE

This joint proxy statement/prospectus is being furnished to you as a stockholder of Parsley as part of the solicitation of proxies by the Parsley board for use at the Parsley special meeting to consider and vote upon a proposal to approve the issuance of shares of Parsley Class A common stock to stockholders of Jagged Peak in connection with the merger pursuant to the terms of the merger agreement, which is attached as Annex A to this joint proxy statement/prospectus. Under the rules of the NYSE, a company listed on the NYSE is required to obtain stockholder approval prior to the issuance of common stock in any transaction or series of related transactions if the number of shares of common stock to be issued is equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the common stock. If the merger is completed, Parsley will issue up to 96,480,854 shares of Parsley Class A common stock in connection with the merger, which will exceed 20% of the shares of Parsley common stock outstanding before such issuance and for this reason Parsley must obtain the approval of Parsley stockholders for the issuance of shares of Parsley Class A common stock in connection with the merger.

In the event the share issuance proposal is approved by the Parsley stockholders, but the merger agreement is terminated (without the merger being completed) prior to the issuance of shares of Parsley Class A common stock pursuant to the merger agreement, Parsley will not issue any shares of Parsley Class A common stock as a result of the approval of the share issuance proposal.

The Parsley board has unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the share issuance, are fair to, and in the best interests of, Parsley and the Parsley stockholders and approved and declared advisable the merger agreement and the transactions contemplated by the merger agreement, including the share issuance.

The Parsley board accordingly unanimously recommends that Parsley stockholders vote “FOR” the share issuance proposal pursuant to the merger agreement, as disclosed in this joint proxy statement/prospectus, particularly the related narrative disclosures in “The Merger” and “The Merger Agreement” and as attached as Annex A to this joint proxy statement/prospectus.

Assuming a quorum is present at the Parsley special meeting, approval of the share issuance proposal requires the affirmative vote of a majority of votes cast by Parsley stockholders entitled to vote thereon and present in person or represented by proxy at the Parsley special meeting. Accordingly, a Parsley stockholder’s abstention from voting will have the same effect as a vote “against” the share issuance proposal, while a broker non-vote or the failure of a Parsley stockholder to vote will not count as votes cast and will have no effect on the outcome of the share issuance proposal.

 

 

IF YOU ARE A PARSLEY STOCKHOLDER, THE PARSLEY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE SHARE ISSUANCE PROPOSAL

 

53

JAGGED PEAK SPECIAL MEETING

General

This joint proxy statement/prospectus is being provided to Jagged Peak stockholders as part of a solicitation of proxies by the Jagged Peak board for use at the Jagged Peak special meeting and at any adjournments or postponements of such special meeting. This joint proxy statement/prospectus provides Jagged Peak stockholders with important information about the Jagged Peak special meeting and should be read carefully in its entirety.

Date, Time and Place of the Jagged Peak Special Meeting

The Jagged Peak special meeting will be held on January 9, 2020, at 8:00 A.M., Mountain Time, at Jagged Peak’s principal executive offices at 1401 Lawrence Street, Suite 1800, Denver, Colorado 80202.

Purposes of the Jagged Peak Special Meeting

The Jagged Peak special meeting is being held to consider and vote on the following proposals:

 

•

Proposal 1: to approve and adopt the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus, pursuant to which each eligible share of Jagged Peak common stock will be converted automatically into the right to receive 0.447 shares of Parsley Class A common stock with cash paid in lieu of any fractional shares of Parsley Class A common stock, if any; and

 

•

Proposal 2: to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Jagged Peak’s named executive officers that is based on or otherwise relates to the merger, discussed under the heading “The Merger—Interests of Certain Jagged Peak Directors and Executive Officers in the Merger.”

Recommendation of the Jagged Peak Board

The Jagged Peak board unanimously recommends that Jagged Peak stockholders vote:

 

•

Proposal 1: “FOR” the Jagged Peak merger proposal; and

 

•

Proposal 2: “FOR” the Jagged Peak compensation proposal.

This joint proxy statement/prospectus contains important information regarding these proposals and factors that Jagged Peak stockholders should consider when deciding how to cast their votes. Jagged Peak stockholders are encouraged to read the entire document carefully, including the annexes to and documents incorporated by reference into this joint proxy statement/prospectus, for more detailed information regarding the merger agreement and the merger.

The Non-Binding Compensation Advisory Proposal and Interests of Directors

In considering the recommendations of the Jagged Peak board, Jagged Peak stockholders should be aware that some of Jagged Peak’s directors and executive officers may have interests that are different from, or in addition to, the interests of Jagged Peak stockholders more generally. For additional information, please see “The Merger—Interests of Certain Jagged Peak Directors and Executive Officers in the Merger.”

Section 14A of the Exchange Act, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires that Jagged Peak provide its stockholders with the opportunity to vote to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Jagged Peak’s named executive officers that is based on or otherwise relates to the merger, as disclosed in this joint proxy statement/prospectus, including the compensation table and the related narrative named executive officer compensation disclosures set forth in “The Merger—Interests of Certain Jagged Peak Directors and Executive

 

54

Officers in the Merger.” This vote is commonly referred to as a “golden parachute say on pay” vote. Accordingly, Jagged Peak stockholders are being provided with the opportunity to cast an advisory (non-binding) vote on those change of control payments.

Jagged Peak stockholders should note that the non-binding compensation advisory proposal is merely an advisory vote that will not be binding on Jagged Peak, Parsley, or their respective boards of directors. Further, the underlying plans and arrangements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the advisory vote, if the merger is consummated, the eligibility of the Jagged Peak named executive officers for such payments and benefits will not be affected by the outcome of the advisory vote.

The proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Jagged Peak’s named executive officers that is based on or otherwise relates to the merger is a vote separate and apart from the vote on the proposal to adopt the merger agreement. Accordingly, a Jagged Peak stockholder may vote to approve one proposal and not the other. Because the vote on the proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Jagged Peak’s named executive officers that is based on or otherwise relates to the merger is advisory in nature only, it will not be binding on Jagged Peak or Parsley, and the approval of the proposal is not a condition to the completion of the merger.

Voting by Directors and Executive Officers

On the Jagged Peak record date, there were                shares of Jagged Peak common stock outstanding. On the Jagged Peak record date, Jagged Peak directors and executive officers, and their affiliates, as a group, beneficially owned and were entitled to vote                 shares of Jagged Peak common stock, or approximately            % of the issued and outstanding shares of Jagged Peak common stock. Although none of them has entered into any agreement obligating them to do so as a director or executive officer of Jagged Peak, Jagged Peak currently expects that all of its directors and executive officers will vote their shares “FOR” the Jagged Peak merger proposal and “FOR” the Jagged Peak compensation proposal.

Voting and Support Agreement with Q-Jagged Peak

In connection with the execution of the merger agreement, Q-Jagged Peak, an affiliate of Quantum, entered into the Quantum Support Agreement with respect to the Quantum Support Agreement Shares. As of the Jagged Peak record date, Q-Jagged Peak holds and is entitled to vote in the aggregate approximately            % of the issued and outstanding shares of Jagged Peak common stock entitled to vote at the Jagged Peak special meeting.

Pursuant to the Quantum Support Agreement, Q-Jagged Peak has agreed, subject to a reduction of the voting requirement in the event the Jagged Peak board changes its recommendation regarding voting in favor of approving the merger agreement, to vote all of the Quantum Support Agreement Shares (i) in favor of the approval and adoption of the merger agreement and the transactions contemplated by the merger agreement, including the merger, subject to certain exceptions and (ii) against specified actions that would discourage, delay or adversely affect the merger, including specified actions that contemplate alternative transactions. In the event that the Jagged Peak board has changed its recommendation to its stockholders to approve and adopt the merger agreement, Q-Jagged Peak’s voting obligation is reduced to 34% of the total issued and outstanding shares of Jagged Peak common stock plus additional votes proportionate to the voting percentage of Jagged Peak’s other stockholders. Under the Support Agreement, Q-Jagged Peak has granted to Parsley an irrevocable proxy to vote the Quantum Support Agreement Shares as provided above. Subject to certain exceptions, the Quantum Support Agreement restricts Q-Jagged Peak from transferring Jagged Peak common stock until the termination of the Quantum Support Agreement.

 

55

The Quantum Support Agreement, including the irrevocable proxy granted thereunder, will terminate upon the earlier of (i) the date the merger agreement is validly terminated in accordance with its terms or (ii) the effective time. The Quantum Support Agreement is attached to this joint proxy statement/prospectus as Annex F.

Attendance at the Jagged Peak Special Meeting

Only Jagged Peak stockholders of record on the Jagged Peak record date, beneficial owners of Jagged Peak common stock on the Jagged Peak record date, holders of valid proxies for the Jagged Peak special meeting, and invited guests of Jagged Peak may attend the Jagged Peak special meeting.

All attendees should be prepared to present government-issued photo identification (such as a driver’s license or passport) for admittance. The additional items, if any, that attendees must bring depend on whether they are Jagged Peak stockholders of record, beneficial owners of Jagged Peak common stock or proxy holders.

 

•

A Jagged Peak stockholder who holds shares of Jagged Peak common stock directly registered in such stockholder’s name with Jagged Peak’s transfer agent, Computershare Trust Company, N.A. (a “Jagged Peak stockholder of record”), who wishes to attend the Jagged Peak special meeting in person should bring government-issued photo identification.

 

•

A beneficial owner of Jagged Peak common stock who wishes to attend the Jagged Peak special meeting in person should bring:

 

•

government-issued photo identification; and

 

•

proof of beneficial ownership as of the Jagged Peak record date (e.g., a letter from the bank, broker, or other nominee that is the record owner of such beneficial owner’s shares, a brokerage account statement, or the voting instruction form provided by the bank, broker or other nominee).

 

•

A proxy holder who wishes to attend the Jagged Peak special meeting in person should bring:

 

•

government-issued photo identification;

 

•

the validly executed proxy naming such person as the proxy holder, signed by the Jagged Peak stockholder of record; and

 

•

proof of the signing stockholder’s record ownership as of the Jagged Peak record date.

No cameras, recording equipment, or other electronic devices will be allowed in the meeting room. Failure to provide the requested documents at the door or failure to comply with the procedures for the Jagged Peak special meeting may prevent stockholders from being admitted to the Jagged Peak special meeting.

Record Date

The Jagged Peak board has fixed the close of business on November 25, 2019 as the Jagged Peak record date for the determination of the Jagged Peak stockholders entitled to receive notice of, and to vote at, the Jagged Peak special meeting. The Jagged Peak stockholders of record on the Jagged Peak record date are the only Jagged Peak stockholders that are entitled to receive notice of, and to vote at, the Jagged Peak special meeting or any adjournments or postponements of the Jagged Peak special meeting.

Outstanding Shares as of Record Date and Voting Rights of Jagged Peak Stockholders

On the Jagged Peak record date, there were                shares of Jagged Peak common stock outstanding, held by holders of record. Each outstanding share of Jagged Peak common stock entitles its holder of record to one vote on each matter to be considered at the Jagged Peak special meeting. Jagged Peak stockholders are entitled to vote on each proposal presented.

 

56

A complete list of registered Jagged Peak stockholders entitled to vote at the Jagged Peak special meeting will be available for inspection at Jagged Peak’s principal executive offices at 1401 Lawrence Street, Suite 1800, Denver, Colorado 80202, during regular business hours for a period of no less than ten days before the Jagged Peak special meeting and at the place of the Jagged Peak special meeting during the meeting.

Quorum; Abstentions and Broker Non-Votes

In order for business to be conducted at the Jagged Peak special meeting, a quorum must be present. A quorum at the Jagged Peak special meeting requires the presence of the holders of a majority of the total issued and outstanding shares of Jagged Peak common stock entitled to vote at the Jagged Peak special meeting, represented in person or by proxy. Abstentions will be counted for purposes of determining whether there is a quorum at the Jagged Peak special meeting. Shares represented by broker non-votes will not be considered present and entitled to vote at the Jagged Peak special meeting for the purpose of determining the presence of a quorum.

Adjournment

If a quorum is not present or represented, the chairman of the meeting or the holders of a majority in interest of those present or represented may adjourn the Jagged Peak special meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified.

Vote Required

The votes required for each proposal are as follows:

 

•

Proposal 1. The affirmative vote of the holders of a majority of the outstanding shares of Jagged Peak common stock entitled to vote on the proposal is required to approve the Jagged Peak merger proposal. Abstentions, failure to submit a proxy, or failure to vote in person at the Jagged Peak special meeting will have the same effect as a vote “against” the Jagged Peak merger proposal. Because the Jagged Peak merger proposal is non-routine, banks, brokers, and other nominees do not have discretionary authority to vote on the Jagged Peak merger proposal and will not be able to vote on the Jagged Peak merger proposal absent instructions from the beneficial owner. The failure of a beneficial owner to provide voting instructions to its bank, broker, or other nominee will have the same effect as a vote “against” the Jagged Peak merger proposal.

 

•

Proposal 2. The affirmative vote of the holders of a majority of the Jagged Peak common stock entitled to vote thereon and present in person or represented by proxy at the Jagged Peak special meeting is required to approve the Jagged Peak compensation proposal. Abstentions are considered shares of Jagged Peak common stock present and entitled to vote and will have the same effect as a vote “against” the Jagged Peak compensation proposal. Any Jagged Peak stockholder who fails to submit a vote (e.g., by not submitting a proxy and not voting in person) will not be considered present and entitled to vote; accordingly, the failure to submit a vote will have no effect on the outcome of the Jagged Peak compensation proposal. Because the Jagged Peak compensation proposal is non-routine, banks, brokers, and other nominees do not have discretionary authority to vote on the Jagged Peak compensation proposal and will not be able to vote on the Jagged Peak compensation proposal absent instructions from the beneficial owner. The failure of a beneficial owner to provide voting instructions to its bank, broker, or other nominee will result in a broker non-vote, which will have no effect on the outcome of the Jagged Peak compensation proposal.

An abstention occurs when the beneficial owner of shares, or a bank, broker or other nominee holding shares for a beneficial owner, is present, in person or by proxy, and entitled to vote at the meeting, but such person refrains from voting as to a particular proposal by expressly marking the “abstain” box on the voting instruction form or ballot.

 

57

A broker non-vote occurs when a broker or other nominee returns a valid proxy card without voting on such proposal because they did not receive voting instructions from the street name holder and do not have discretionary authority to vote the shares on a particular proposal. Under applicable rules, banks, brokers, and other nominees have discretionary voting power with respect to matters that are considered routine. Shares represented by broker non-votes, however, will not be voted on the share issuance proposal since the proposal is considered non-routine and therefore the bank, broker, or other nominee has no discretionary authority to vote on such proposal. Such shares will be disregarded in the calculation of “votes cast” with respect to the proposals included herein and therefore will have no effect on the outcome of such proposals.

How to Vote

Jagged Peak stockholders of record on the Jagged Peak record date may have their shares of Jagged Peak common stock voted by submitting a proxy or may vote in person at the Jagged Peak special meeting by following the instructions provided on the enclosed proxy card. Jagged Peak recommends that Jagged Peak stockholders entitled to vote submit a proxy prior to the Jagged Peak special meeting even if they plan to attend the Jagged Peak special meeting.

Jagged Peak stockholders of record may vote in one of the following ways:

 

•

Internet: Jagged Peak stockholders of record may submit their proxy over the internet at the web address shown on their proxy card or voting instruction form. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m., Eastern Time (9:59 p.m., Mountain Time), on January 8, 2020. Stockholders will be given an opportunity to confirm that their voting instructions have been properly recorded. Jagged Peak stockholders who submit a proxy this way need not send in their proxy card.

 

•

Telephone: Jagged Peak stockholders of record may submit their proxy by calling the toll-free telephone number shown on their proxy card or voting instruction form. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m., Eastern Time (9:59 p.m., Mountain Time), on January 8, 2020. Easy-to-follow voice prompts will guide stockholders through the voting and allow them to confirm that their instructions have been properly recorded. Jagged Peak stockholders who submit a proxy this way need not send in their proxy card.

 

•

Mail: Jagged Peak stockholders of record may submit their proxy by properly completing, signing, dating and mailing their proxy card or voting instruction form in the self-addressed, stamped envelope (if mailed in the United States) included with this joint proxy statement/prospectus. Jagged Peak stockholders who vote this way should mail the proxy card early enough so that it is received prior to the closing of the polls at the Jagged Peak special meeting.

 

•

In Person: Jagged Peak stockholders of record may vote in person at the Jagged Peak special meeting or by sending a representative with an acceptable proxy that has been signed and dated; attendance at the Jagged Peak special meeting will not, however, in and of itself constitute a vote or a revocation of a prior proxy.

Jagged Peak stockholders are encouraged to submit a proxy promptly. Each valid proxy received in time will be voted at the Jagged Peak special meeting according to the choice specified, if any. Executed but uninstructed proxies (i.e., proxies that are properly signed, dated and returned but are not marked to tell the proxies how to vote) will be voted in accordance with the recommendations of the Jagged Peak board.

Jagged Peak stockholders who hold their shares of Jagged Peak common stock beneficially in “street name” and wish to submit a proxy must provide instructions to the bank, broker, or other nominee that holds their shares of record as to how to vote their shares with respect to Proposals 1 and 2. Jagged Peak stockholders who hold their shares of Jagged Peak common stock beneficially and wish to vote in person at the Jagged Peak special meeting must obtain proxies issued in their own names (known as a “legal proxy”).

 

58