| SECURITIES AND EXCHANGE COMMISSION | |
| Washington, D.C. 20549 | |
| SCHEDULE 13D/A | |
| Under the Securities Exchange Act of 1934 | |
| (Amendment No. 1)* | |
|
Penn Virginia Corporation | |
| (Name of Issuer) | |
|
Common Stock, par value $0.01 per share | |
| (Title of Class of Securities) | |
|
707882106 | |
| (CUSIP Number) | |
|
Marc Weingarten, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2000 | |
| (Name, Address and Telephone Number of Person | |
| Authorized to Receive Notices and Communications) | |
|
June 25, 2014 | |
| (Date of Event Which Requires Filing of This Statement) | |
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the following box. [ ]
(Page 1 of 8 Pages)
______________________________
* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
| CUSIP No. 707882106 | SCHEDULE 13D/A | Page 2 of 8 Pages |
| 1 |
NAME OF REPORTING PERSONS Soros Fund Management LLC | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ¨ (b) x | ||
| 3 | SEC USE ONLY | |||
| 4 |
SOURCE OF FUNDS AF (See Item 3) | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) | ¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION Delaware | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
7 |
SOLE VOTING POWER 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | ||
| 8 |
SHARED VOTING POWER 0 | |||
| 9 |
SOLE DISPOSITIVE POWER 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | |||
| 10 |
SHARED DISPOSITIVE POWER 0 | |||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) (see Item 5) 9.53% | |||
| 14 |
TYPE OF REPORTING PERSON OO | |||
| CUSIP No. 707882106 | SCHEDULE 13D/A | Page 3 of 8 Pages |
| 1 |
NAME OF REPORTING PERSONS George Soros | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ¨ (b) x | ||
| 3 | SEC USE ONLY | |||
| 4 |
SOURCE OF FUNDS AF (See Item 3) | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) | ¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION United States | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
7 |
SOLE VOTING POWER 0 | ||
| 8 |
SHARED VOTING POWER 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | |||
| 9 |
SOLE DISPOSITIVE POWER 0 | |||
| 10 |
SHARED DISPOSITIVE POWER 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | |||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) (see Item 5) 9.53% | |||
| 14 |
TYPE OF REPORTING PERSON IN | |||
| CUSIP No. 707882106 | SCHEDULE 13D/A | Page 4 of 8 Pages |
| 1 |
NAME OF REPORTING PERSONS Robert Soros | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ¨ (b) x | ||
| 3 | SEC USE ONLY | |||
| 4 |
SOURCE OF FUNDS AF (See Item 3) | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) | ¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION United States | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
7 |
SOLE VOTING POWER 0 | ||
| 8 |
SHARED VOTING POWER 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | |||
| 9 |
SOLE DISPOSITIVE POWER 0 | |||
| 10 |
SHARED DISPOSITIVE POWER 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | |||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) (see Item 5) 9.53% | |||
| 14 |
TYPE OF REPORTING PERSON IN | |||
| CUSIP No. 707882106 | SCHEDULE 13D/A | Page 5 of 8 Pages |
This Amendment No. 1 ("Amendment No. 1") amends and supplements the statement on Schedule 13D filed with the Securities and Exchange Commission (the "SEC") on March 18, 2014 (the "Original Schedule 13D" and together with this Amendment No. 1, the "Schedule 13D") with respect to the shares of common stock, par value $0.01 per share (the "Common Stock"), of Penn Virginia Corporation, a Virginia corporation (the "Issuer"). Capitalized terms used herein and not otherwise defined in this Amendment No. 1 have the meanings set forth in the Schedule 13D. This Amendment No. 1 amends Items 3, 4, 5, 6 and 7 as set forth below.
| Item 3. | SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION |
|
Item 3 of the Schedule 13D is hereby amended and restated in its entirety as follows:
The Reporting Persons used a total of approximately $29,184,100 (including brokerage commissions) in the aggregate to acquire the shares of Common Stock and options reported in this Schedule 13D.
The source of funding for the purchase of the Common Stock and options reported herein as beneficially owned by the Reporting Persons is the working capital of the Funds. The shares of Common Stock reported herein are or may be held from time to time in margin accounts established by the Funds with their respective brokers or banks and a portion of the purchase price for the Common Stock may be obtained through margin borrowing. Securities positions which may be held in the margin accounts, including the Common Stock, may be pledged as collateral security for the repayment of debit balances in the margin accounts. |
| Item 4. | PURPOSE OF TRANSACTION |
|
Item 4 of the Schedule 13D is hereby amended and supplemented by the addition of the following:
The responses to Items 3, 5 and 6 of this Schedule 13D are incorporated herein by reference.
On June 25, 2014, SFM LLC sent a letter to the Issuer reiterating its view that the best path to maximize share value would be for the Issuer to be sold. It also expressed its disappointment with the Issuer's rejection of its suggestions that the Issuer provide additional financial incentives to its management team to align their interests with the Issuer's shareholders in the event of a sale. In the letter, SFM LLC also expressed its concern with what it believes to be the Issuer's recent missteps, including: (i) the recent investor presentation failures and the resulting decline in the price of the Common Stock; (ii) the Issuer's private offering of convertible preferred stock at a significant discount to inherent value, which diluted existing equity holders by approximately 21%; and (iii) the intended use of the proceeds from such offering. SFM LLC also noted that the board of directors of the Issuer has presided over a long period of decline in the share price, which further supported its view that the Issuer should pursue a sale. Finally, SFM LLC reserved the right to take any and all actions it believes necessary to ensure that shareholder value is not further eroded if the Issuer fails to pursue a sale. The foregoing summary of letter is qualified in its entirety by reference to the full text of the letter, a copy of which is attached hereto as Exhibit 4 and is incorporated by reference herein. |
| CUSIP No. 707882106 | SCHEDULE 13D/A | Page 6 of 8 Pages |
| Item 5. | INTEREST IN SECURITIES OF THE ISSUER. |
|
Paragraphs (a) – (c) of Item 5 of the Schedule 13D are hereby amended and restated in their entirety as follows:
(a) The aggregate number and percentage of shares of Common Stock to which this Schedule 13D relates is 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock), constituting approximately 9.53% of the Issuer's currently outstanding Common Stock. The aggregate number and percentage of shares of Common Stock reported herein are based upon the 65,596,359 shares of Common Stock outstanding as of May 2, 2014, as reported in the Issuer's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, filed with the SEC on May 12, 2014. |
| (i) | SFM LLC | ||
| (a) | As of the date hereof, SFM LLC may be deemed the beneficial owner of 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock). | ||
| Percentage: Approximately 9.53% as of the date hereof. | |||
| (b) | 1. | Sole power to vote or direct vote: 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | |
| 2. | Shared power to vote or direct vote: 0 | ||
| 3. | Sole power to dispose or direct the disposition: 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | ||
| 4. | Shared power to dispose or direct the disposition: 0 | ||
| (ii) | George Soros: | ||
| (a) | As of the date hereof, George Soros may be deemed the beneficial owner of 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock). | ||
| Percentage: Approximately 9.53% as of the date hereof. | |||
| (b) | 1. | Sole power to vote or direct vote: 0 | |
| 2. | Shared power to vote or direct vote: 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | ||
| 3. | Sole power to dispose or direct the disposition: 0 | ||
| 4. | Shared power to dispose or direct the disposition: 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | ||
| (iii) | Robert Soros: | ||
| (a) | As of the date hereof, Robert Soros may be deemed the beneficial owner of 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock). | ||
| Percentage: Approximately 9.53% as of the date hereof. | |||
| (b) | 1. | Sole power to vote or direct vote: 0 | |
| 2. | Shared power to vote or direct vote: 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | ||
| 3. | Sole power to dispose or direct the disposition: 0 | ||
| 4. | Shared power to dispose or direct the disposition: 6,253,509 shares of Common Stock (including options to purchase 250,000 shares of Common Stock) | ||
| CUSIP No. 707882106 | SCHEDULE 13D/A | Page 7 of 8 Pages |
| (c) Other than the purchase of the call options described in Item 6 of this Amendment No. 1, no transactions in the Common Stock were effected by SFM LLC during the past sixty days. The purchases of such call options were effected in the open market. |
| Item 6. | CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER |
|
Item 6 of the Schedule 13D is hereby amended and supplemented by the addition of the following:
The responses to Items 3, 4 and 5 of this Schedule 13D are incorporated herein by reference.
On June 6, 2014, SFM LLC purchased call option contracts on 250,000 shares of Common Stock with an expiration date of July 19, 2014 and a strike price of $17.00.
Other than the options and as otherwise reported in the Schedule 13D, the Reporting Persons have no contracts, arrangements, understandings or relationships with any persons with respect to securities of the Issuer. |
| Item 7. | EXHIBITS |
| Exhibit | Description |
| 4 | Letter, dated June 25, 2014. |
| CUSIP No. 707882106 | SCHEDULE 13D/A | Page 8 of 8 Pages |
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
Date: June 25, 2014
| SOROS FUND MANAGEMENT LLC |
| By: | /s/ Jay Schoenfarber | |
| Name: | Jay Schoenfarber | |
| Title: | Deputy General Counsel |
| GEORGE SOROS |
| By: | /s/ Jay Schoenfarber | |
| Name: | Jay Schoenfarber | |
| Title: | Attorney-in-Fact |
| ROBERT SOROS |
| By: | /s/ Jay Schoenfarber | |
| Name: | Jay Schoenfarber | |
| Title: | Attorney-in-Fact |
Soros Fund Management LLC EXHIBIT 4
888 Seventh Avenue
New York, New York 10106
Tel (212) 320 5000
Fax (212) 245 5154
June 25, 2014
Board of Directors
Penn Virginia Corporation
4 Radnor Corporate Center
100 Matsonford Road, Suite 200
Radnor, PA 19087
Gentlemen and Lady:
We are extremely disappointed that, as indicated in the letter we received from Mr. Cloues dated June 18, 2014, Penn Virginia Corporation ("Penn Virginia" or the "Company") has rejected our suggestions to provide additional financial incentives to its management team in the event of a sale. We made those suggestions to further align management's interests with the best interests of shareholders, as we have previously communicated to you our belief that you should explore strategic alternatives as a means to maximize shareholder value. We believe that the optimal means to maximize value is for the Company to be sold. By reasserting in the letter your belief in your operating strategy, it appears to us that you are not going to undertake a formal evaluation of Penn Virginia's strategic alternatives.
As the largest shareholder of Penn Virginia, we are deeply concerned by the Company's recent missteps. Management's presentations at several recent conferences have been underwhelming, culminating in a wholly avoidable revision of its investor presentation type-curve disclosure.1 We believe that these investor relations disasters are the reason why the Company’s stock dropped 14.4% from $16.48 on May 29, 2014 to $14.11 on June 10, 2014, underperforming its peer companies by 15% over that period.2
In light of this poor stretch of share price performance, which we believe was driven almost entirely by the Company’s disappointing investor-relations effort, we were then astounded by the timing of the June 10, 2014 press release announcing Penn Virginia's proposed private offering of convertible preferred stock. The issuance of this convertible preferred stock was at a significant discount to inherent value and diluted existing equity holders by approximately 21%.3 While the timing of this transaction was particularly egregious, the strategic rationale
__________________________
1 In presentations, the Company revised down its reported type-curves, showing third-party numbers without explaining to investors the reason behind the decrease. It is common in the E&P industry for third-party type-curve estimates to be lower than company estimates. However, without proper disclosure, this revision was taken by investors as a signal that the Company’s wells had started to deteriorate – which we believe is very much not the case.
2 The SIG Oil Exploration & Production Index (“EPX”) rose 0.6% from 537.04 to 540.00 in the same period.
3 $325mm converts at $18.34/share = 17.72mm shares, versus previous fully diluted share-count of 85.7mm shares.
was not much better. The Company's intended use for the proceeds of this offering is to finance the acceleration of its development program and increase its lease acquisition effort in the Eagle Ford Shale. Based on management’s own estimates for the present value created by this accelerated drilling program, however, it is clear this decision has destroyed shareholder value.
We believe that the shares of the Company are fundamentally undervalued, and that issuing equity or equity-linked securities at these prices to accelerate drilling in the manner contemplated fails to optimize per-share value. Other potential owners of this asset have a lower cost of capital and better scale in the Eagle Ford Shale and are clearly its optimal owners. Regrettably, the board’s decision to grow in this dilutive manner indicates to us that it is more interested in “empire building” than maximizing shareholder value.
The board apparently views this decision as one targeted at building the Company for the long run. But we note that this board of directors has presided over a long period of decline at Penn Virginia, which has resulted in a current stock price that is lower than the stock price ten years ago.4 This record of failure to create value over the long term is not a track record that justifies making dilutive transactions today in the hopes that someday in the future the enhanced scale will somehow benefit shareholders more than a sale today would.
Again, we believe that the Company should promptly pursue a sale in order to maximize shareholder value. We believe there are numerous potential acquirers who would be interested in acquiring the Company at a material premium to its current trading price, as demonstrated by any number of precedent transactions in the industry. Decisions about the future direction of your development program should be left to the buyers, who enjoy a considerably lower cost of capital and can therefore accelerate drilling in a more accretive manner.
The time has come for the Company to put itself up for sale as the surest path to maximize shareholder value. Should you fail to start exploring sale alternatives, we reserve the right to take any and all actions we believe necessary to ensure that shareholder value is not further eroded.
Very truly yours,
/s/ Scott Bessent
Scott Bessent
Chief Investment Officer
Cc: Joshua Donfeld, Soros Fund Management LLC
David Rogers, Soros Fund Management LLC
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4 As a comparison, since inception on June 28, 2005 the EPX is up over 170% while the share price of the Company is down over 30% (in each case excluding dividends and other distributions).