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Executive Network Partnering Corporation *

Executive Network Partnering Corporation *

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Grey Rock Investment Partners

ENTERPRISE VALUE: $1.3 billion
ANTICIPATED SYMBOL: GRNT

Executive Network Partnering Corporation proposes to combine with Grey Rock Investment Partners, a Dallas-based private equity firm with more than $525 million of committed capital under management and interests in more than 2,500 wells in core areas of the Midland, Delaware, Bakken, Eagle Ford, DJ, and Haynesville plays.

With a focus on lower and mid-market non-operated working interests, Grey Rock builds positions with low breakeven costs to provide investors with attractive risk-adjusted returns. Grey Rock was founded and is led by three managing directors: Matt Miller, Griffin Perry and Kirk Lazarine.

TRANSACTION

  • Pro forma enterprise value of Granite Ridge estimated at approximately $1.3 billion underpinned by an expected initial 3.5% – 4.6% regular dividend yield, depending on redemptions.
  • Grey Rock will contribute oil and gas assets currently held in its Fund I, Fund II, and Fund III portfolios to Granite Ridge in exchange for equity.
  • Grey Rock will not receive any cash proceeds as part of this transaction and will roll all of its equity into the pro forma company.
  • Assuming no redemptions paid from ENPC cash in trust, gross proceeds of approximately $414 million held in the trust account will be transferred to Granite Ridge in connection with the transaction for growth capital purposes, including future acquisitions.
  • Members of the Grey Rock team will continue to help manage the assets post-transaction through a long-term services agreement, providing technical, legal, commercial, acquisition and divestment, and back-office support.
  • The seasoned team brings significant oil and gas experience across multiple basins, having generated strong returns through various cycles.
  • Granite Ridge and Grey Rock have agreed that during the term of the services agreement, Granite Ridge and any additional oil and gas-focused funds managed by Grey Rock shall have the opportunity to jointly participate in investment opportunities for upstream oil and gas assets, with 75% of any future transactions allocated to Granite Ridge and 25% of any future transactions allocated to oil and gas funds managed by Grey Rock.

Executive Network Transaction Overview

PIPE

  • There is no PIPE for this transaction.

LOCK-UP

Company & Sponsor Lock-Up:

  • Existing GREP Members will not be able to transfer any shares of Parent common stock held by them for a period that is the earlier of
    • (a) 180 days from the date of closing
    • (b) the date on which the closing price of the Parent common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and similar transactions) for any 20 trading days within any 30-trading day period.

SPONSOR AGREEMENT

  • 371,518 of the shares of Parent common stock issuable to the Class F Holders in connection with the Mergers (the “SPAC Vesting Shares”) will be unvested as of the closing and will vest if on the 90th calendar day following the closing (the “Adjustment Date”), the VWAP of a share of Parent common stock for the trailing twenty trading days ending on the day prior to the Adjustment Date (“Adjustment VWAP”) is less than $10.00.
  • In such case, all or a portion of the SPAC Vesting Shares shall vest such that the product of
    • (i) the vested SPAC Vesting Shares plus all other shares of Parent common stock issued to the Class F Holders in the Mergers, multiplied by
    • (ii) the Adjustment VWAP shall equal $8,668,750; provided that the Adjustment VWAP shall be no less than $7.00 for purposes of the foregoing calculation.
  • Any SPAC Vesting Shares not vesting in accordance with the foregoing will be deemed to be transferred by the forfeiting holder to Parent for no consideration and shall be canceled by Parent.

SPONSOR SHARES AND WARRANTS CANCELLATION/FORFEITURE

  • 495,357 shares of ENPC Class F common stock shall be converted into 1,238,393 shares of ENPC Class A common stock (of which 371,518 shares of ENPC Class A common stock shall be subject to the vesting and forfeiture (the “ENPC Class F Conversion”).
  • All other shares of ENPC Class A common stock held by Sponsor and the directors of ENPC shall automatically be canceled without any conversion, payment or distribution (the “Sponsor Share Cancellation”).
  • All shares of ENPC Class B common stock (Founder Shares) outstanding will be deemed transferred to ENPC and be surrendered and forfeited for no consideration (the “ENPC Class B Contribution”).
  • All ENPC private placement warrants and ENPC working capital warrants will be deemed transferred to ENPC and will be surrendered and forfeited for no consideration.

NOTABLE CONDITIONS TO CLOSING

  • Subject to ENPC having net tangible assets of at least $5,000,001.

NOTABLE CONDITIONS TO TERMINATION

  • The Business Combination Agreement may be terminated by either ENPC or GREP, if the transactions have not been consummated on or before December 18, 2022.
  • By either ENPC or GREP if any governmental entity having jurisdiction over a party issues any order or takes any other action permanently restraining, enjoining, or otherwise prohibiting the consummation of the transactions contemplated by the Business Combination Agreement and such order, decree, ruling, or injunction or other action shall have become final and non-appealable.

MANAGEMENT SERVICES AGREEMENT

  • Parent will enter into a Management Services Agreement (the “MSA”) with Grey Rock Administration, LLC (“Manager”).
  • Manager will provide general management, administrative and operating services covering the oil and gas assets and other properties of Parent (the “Assets”) and the day-to-day business and affairs of Parent relating to the Assets.
  • Parent shall pay Manager an annual services fee of $10 million and shall reimburse Manager for certain Parent group costs related to the operation of the Assets (including for third party costs allocated or attributable to the Assets).
  • The initial term of the MSA expires on April 30, 2028; however, the MSA will automatically renew for additional consecutive one-year renewal terms until terminated in accordance with its terms.
  • Upon any termination of the MSA, Manager shall continue to provide transition services for a period of up to 90 days.
  • If Parent terminates the MSA for convenience prior to the end of the initial term or any renewal term if less than 90 days notice is given by Parent then Parent will be required to pay a termination fee to Manager equal to the lesser of $10 million or 50% of the remaining unpaid annual service fee applicable to the remainder of the initial term or to any renewal term, as applicable.
  • Parent will not be required to pay a termination fee if the MSA is terminated by notice
    • (a) by Parent with at least 90 days notice prior to the expiration of the initial term or any renewal term, or
    • (b) by Parent (i) upon a change of control or bankruptcy of Manager, (ii) upon the occurrence of certain key person events, (iii) upon the occurrence of uncured circumstances of malfeasance by Manager or certain of its employees or (iv) upon Manager’s uncured material breach of the MSA.

ADVISORS

  • Evercore is acting as exclusive financial and capital markets advisor to Grey Rock
  • Stephens Inc. is acting as financial advisor to ENPC.
  • Holland & Knight LLP is acting as legal counsel to Grey Rock
  • Kirkland & Ellis LLP is acting as legal counsel to ENPC.

MANAGEMENT & BOARD

Executive Officers

Alex J. Dunn, 49
Chief Executive Officer, Chief Financial Officer & Director

Mr. Dunn is an experienced entrepreneur and operator who helped build Vivint Smart Home Inc., a leading smart home company, from an early stage company in 2005 to a business which for the year ended December 31, 2019 reported over $1.15 billion of total revenues and 1.55 million subscribers. He was President of Vivint Smart Home from February 2013 to March 2020 and served as Chief Operating Officer from July 2005 to January 2013. In 2011, Mr. Dunn co-founded Vivint Solar, spun it out of Vivint Smart Home and helped take it public in 2014. Until March 2020, Mr. Dunn served on the board of directors for both Vivint Smart Home and Vivint Solar. Prior to Vivint, Mr. Dunn served as Deputy Chief of Staff and Chief Operating Officer to Governor Mitt Romney in Massachusetts. Before joining Governor Romney’s staff, Mr. Dunn was an entrepreneur-in-residence at the venture capital firm General Catalyst. Mr. Dunn started his career as co-founder and CEO of LavaStorm, a technology and engineering services firm, and holds a B.S. from Brigham Young University.

 

Board of Directors

Paul Ryan, 50
Chairman of the board of directors

Mr. Ryan has served as a director of Fox Corporation (NASDAQ) since March 2019. Prior to joining Fox Corporation, from 2015 to 2019, Mr. Ryan served as the 54th Speaker of the U.S. House of Representatives. He was Chairman of the House Ways and Means Committee from January 2015 to October 2015 and Chairman of the House Budget Committee from 2011 to 2015. Mr. Ryan served as a Member of the U.S. House of Representatives from 1999 to 2019. In 2012, he was selected to serve as former Governor Mitt Romney’s Vice-Presidential nominee. Mr. Ryan currently is Professor of the Practice, Political Science and Economics, at the University of Notre Dame.

Richard (Dick) Boyce, 66
Director

Mr. Boyce is a former partner at TPG Capital, one of the largest global investment partnerships, where he founded and led TPG’s Operating Group from 1997 to 2013. He also previously served as Chief Executive Officer of J. Crew Group, Inc. from 1997 to 1999, and as Senior Vice President of PepsiCo, Inc.’s North American Operations from 1994 to 1997. Prior to that, Mr. Boyce was a partner of Bain & Company for over 12 years. Mr. Boyce has run the office of Schafer Meadows, an organization focused on tech-enabled investing, since 2015. He also currently serves as senior advisor to Solamere Capital and Altamont Capital, roles he has held since 2015 and 2016, respectively. Throughout his career, Mr. Boyce has served on numerous private and public company boards of directors, including the J. Crew Group, Burger King and Del Monte Foods. Since 2016, he has served on the board of directors of Allbirds, Inc., a footwear manufacturing company, and Spyce Food Co., an innovative tech-enabled restaurant. In addition, he served on the Mitt Romney 2012 National Board and currently serves on the National Council of AEI. For the last five years, Mr. Boyce has been an advisor for The COMMIT Foundation, a Veterans career transition mentoring group. Mr. Boyce holds a B.S.E. from Princeton University and an M.B.A. from the Stanford Graduate School of Business.

Michael M. Calbert, 57
Director 

Mr. Calbert is a former senior partner with Kohlberg Kravis Roberts & Co. (“KKR”), where he was responsible for the global retail private equity practice. During his 15 years at KKR, Mr. Calbert served on all the firm’s global private equity investment committees and portfolio management committees. Mr. Calbert currently serves on the boards of AutoZone (NYSE: AZO) and Vestcom International, he is the lead director for Brookshire Grocery Company, and he continues to serve as chairman of the board of Dollar General (NYSE: DG), a company he took private in 2007 while at KKR. Mr. Calbert has served on the board of directors of Toys “R” Us from 2008 to 2015, Academy Sports & Outdoors from 2012 to 2016, Pets at Home from 2012 to 2015, and U.S. Foods from 2008 to 2016. Prior to KKR, Mr. Calbert was Chief Financial Officer of Randall’s Food Markets, a $2.5 billion revenue retailer based in Texas. While at Randall’s, Michael took the company private through a buyout with KKR. Mr. Calbert has a bachelor’s degree in business from Stephen F. Austin State University and an MBA from University of Houston.

Gisel Ruiz, 50
Director

Ms. Ruiz is a former executive who has served in several roles for various business segments of Walmart Inc., most recently serving as Chief Operating Officer of Sam’s Club from February 2017 to June 2019. In that role, she led the operations, real estate strategy, territory sales, food service operations and club innovation divisions. Prior to serving as Chief Operating Officer of Sam’s Club, Ms. Ruiz led the human resources organization for Walmart International from 2015 to 2017, served as Chief Operating Officer for Walmart US from 2012 to 2015, and served as Chief People Officer of Walmart US from 2010 through 2012. Ms. Ruiz holds a B.S. from Santa Clara University.

ByRoman Developer