Adams Natural Resources Fund, Inc SC 14D9, filed May 26, 2020
Adams Natural Resources Fund, Inc. (PEO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
ADAMS NATURAL RESOURCES FUND, INC.
(Name of Subject Company)
ADAMS NATURAL RESOURCES FUND, INC.
(Name of Person(s) Filing Statement)
Common Stock, par value $0.001 per share
(Title of Class of Securities)
00548F105
(CUSIP Number of Class of Securities)
500 East Pratt Street, Suite 1300
Baltimore, Maryland 21202
(410) 752-5900
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)
Janis F. Kerns
General Counsel, Corporate Secretary and
Chief Compliance Officer
Adams Natural Resources Fund, Inc.
500 East Pratt Street, Suite 1300
Baltimore, Maryland 21202
(410) 752-5900
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Person(s) Filing Statement)
COPY TO:
Michael D. Mabry
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103
(215) 564-8000
| ¨ | Check the box if the filing relates solely to preliminary communications made before the commencement of a Tender Offer. |
| Item 1. | Subject Company Information. |
The name of the subject company to which this Solicitation/Recommendation Statement on Schedule 14D-9 (together with the Exhibits hereto, this “Statement”) relates is Adams Natural Resources Fund, Inc., a Maryland corporation. The address of the principal executive offices of Adams Natural Resources Fund, Inc. is 500 East Pratt Street, Suite 1300, Baltimore, Maryland 21202. The telephone number of the principal executive offices of Adams Natural Resources Fund, Inc. is (410) 752-5900. The title of the subject class of equity securities to which this Schedule 14D-9 relates is Common Stock at a par value of $0.001 per share (“Shares”). As of March 31, 2020, there were 29,777,752 Shares issued and outstanding.
| Item 2. | Identity and Background of Filing Person. |
The filing person is the subject company. The Fund's name, business address and business telephone number are set forth in Item 1 above.
This Statement relates to the tender offer by Ancora Advisors, LLC and Bulldog Investors, LLC (together, “The Bulldog-Ancora Group”), as described in the Schedule TO filed on May 15, 2020 (the “Bulldog-Ancora Schedule TO”), to purchase up to $70,000,000 of the Shares, for cash at a price per Share of not less than 83% of NAV per Share and not more than 88% of NAV per Share, based on the NAV per Share at the close of the regular trading session of the NYSE, on the Expiration Date, as defined in the Bulldog-Ancora Schedule TO, net to the seller in cash (subject to a $50 processing fee that the Bulldog-Ancora Group will charge for processing each Letter of Transmittal, applicable withholding taxes and any brokerage fees that may apply), without interest upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 15, 2020 (the “Bulldog-Ancora Offer to Purchase”), and in the related Letter of Transmittal (which, together with the Bulldog-Ancora Offer to Purchase, constitute the “Bulldog-Ancora Offer”). The tender offer relates to outstanding Common Stock, par value $0.001 per share, of Adams Natural Resources Fund, Inc.
According to the Bulldog-Ancora Schedule TO, the business address of Bulldog Investors, LLC is Park 80 West—Plaza Two, 250 Pehle Avenue, Suite 708, Saddle Brook, NJ 07663, and the business telephone number is (201) 556-0092.
| Item 3. | Past Contacts, Transactions, Negotiations and Agreements. |
There are no material agreements, arrangements, understandings, or any actual or potential conflicts of interest between the Fund or its affiliates and (1) the Fund, its executive officers, directors or affiliates or (2) The Bulldog-Ancora Group or their executive officers, directors or affiliates.
| Item 4. | The Solicitation or Recommendation. |
a. Solicitation or recommendation. The Board of Directors (“Board”) of the Fund considered and discussed the Bulldog-Ancora Offer on May 22, 2020. After careful consideration of the Fund's potential responses, the Board determined that the Bulldog-Ancora Offer was not in the best interests of shareholders and unanimously determined to recommend that the Fund's shareholders reject the Bulldog-Ancora Offer and not tender their shares to the Bulldog-Ancora Group.
The following discussion of the information and factors considered by the Board is not meant to be exhaustive, but includes material information, factors and analyses considered by the Board in reaching its conclusions and recommendations. The members of the Board evaluated the various factors listed in its Recommendation included in Exhibit (a)(1) hereto in light of its knowledge of the business, financial condition, and prospects of the Fund and based upon the advice of independent legal counsel. In light of the number and variety of factors that the Board considered, the members of the Board did not find it practicable to assign relative weights to the foregoing factors. The Board’s recommendations were made after considering the totality of the information and factors involved. In addition, individual members of the Board may have given different weight to different factors.
b. Reasons. The Board’s reasons for its conclusion and recommendation described above are set forth in its Recommendation included in Exhibit (a)(1) hereto.
c. Intent to tender. To the best knowledge of the Fund, none of its Directors, executive officers, affiliates, or subsidiaries currently intends to tender Shares held of record or beneficially by such person for purchase pursuant to the Bulldog-Ancora Offer.
| Item 5. | Person/Assets, Retained, Employed, Compensated or Used |
The Fund does not currently anticipate directly or indirectly employing, retaining, or compensating any party to make solicitations or recommendations in connection with the Bulldog-Ancora Offer.
| Item 6. | Interest in Securities of the Subject Company |
Pursuant to the Fund’s share repurchase program, the Fund has made the following purchases of its shares within the past 60 days:
| Transaction Date | Number of Shares Purchased | Price per Share | Transaction Type |
| 03/23/2020 | 31,000 | $7.01 | Open Market Purchase |
| 03/24/2020 | 5,192 | $7.56 | Open Market Purchase |
| 03/25/2020 | 6,000 | $8.15 | Open Market Purchase |
| 03/26/2020 | 18,650 | $8.67 | Open Market Purchase |
Other than the foregoing, during the past 60 days, the Fund is not aware of any other transactions with respect to the Shares that have been effected by the Fund or, to the Fund's knowledge, by any of its executive officers, Directors, affiliates or subsidiaries.
| Item 7. | Purposes of the Transaction and Plans or Proposals |
The Fund and its Board have not undertaken and are not currently engaged in any negotiation with The Bulldog-Ancora Group in response to the Bulldog-Ancora Offer. However, the Board continually considers all strategic alternatives available to the Fund and the Fund reserves the right to develop and evaluate other alternatives to the Bulldog-Ancora Offer.
| Item 8. | Additional Information |
The Statement is not an offer to sell, nor a solicitation of an offer to buy, shares of any fund. On May 22, 2020, the Fund issued a press release containing the Recommendation attached as Exhibit (a)(1) hereto relating to the proposed Bulldog-Ancora Offer. The materials have also been filed with the SEC and can be found on the SEC's website (http://www.sec.gov).
Item 9. Exhibits
| Exhibit No. |
Description |
| (a)(1) | Press Release issued by the Fund on May 22, 2020, filed herewith. |
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| ADAMS NATURAL RESOURCES FUND, INC. | ||||
| By: | /s/ Janis F. Kerns | |||
| Name: Title: |
Janis F. Kerns General Counsel, Corporate Secretary and Chief Compliance Officer |
|||
Dated: May 22, 2020
Exhibit (a)(1)
Press Release
BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS
REJECT THE BULLDOG-ANCORA TENDER OFFER
BALTIMORE, MARYLAND, May 22, 2020 —The Board of Directors of Adams Natural Resources Fund, Inc. (NYSE: PEO) unanimously recommends that shareholders REJECT the tender offer (“Offer”) made by activists Bulldog Investors, LLC and Ancora Advisors, LLC (the “Group”) because it furthers a damaging short-term agenda that enriches the Group at the expense of longer-term shareholders.
The Board believes the Group has made the Offer with one goal in mind – to gain control of the Fund and liquidate it for personal profit. The Board believes they are short-term opportunists who bought shares with the express intent to do this, and are not “investors” interested in the well-being of the 90-year-old Fund’s long-term shareholders. After careful consideration of the Offer, the Board has concluded that:
| · | The Offer is a Bad Deal for Shareholders. The Offer is structured as a rarely used and overly complicated modified “Dutch auction,” which is designed to pay the lowest price for the most shares. While the Group says shareholders deserve an opportunity to realize close to net asset value for their shares, tendering shareholders would receive significantly less. The ultimate price paid in the Offer is uncertain and may actually be lower than the market price of shares on the pricing date. |
| · | The Bad Deal for Shareholders is a Good Deal for the Group. The Group is offering to purchase shares at prices ranging from 83-88% of net asset value – prices closely mirroring current market prices – while charging shareholders a $50 fee that is up to three times what it will actually cost the Group to process each acceptance. This could cause participating Fund shareholders to actually lose money by participating in the Offer, while the Group stands to profit further at shareholder expense. |
The self-interest of these short-term opportunists is apparent. The Board believes the Group’s objective is to buy a significant number of shares at low prices to gain control of the Fund and liquidate it. If the Group succeeds, it will profit at the expense of tendering shareholders. While the Group stated “…it is hard to see why…shareholders that need to sell shares in these trying times should have to accept a large discount from NAV,” the Group’s Offer would force tendering shareholders to do exactly that.
| · | Shareholders Should Not Feel Pressured to Make a Decision in Volatile Markets. The Group is conducting its hostile Offer in the midst of the unprecedented COVID-19 pandemic and depressed energy markets to exploit shareholder uncertainty during this time of extreme market volatility. The Board strongly believes that tendering shares during global uncertainty is not in shareholders’ long-term best interests. |
| · | The Fund, with Its 90-year History, Provides Real Benefits to Shareholders. The Fund provides a minimum annual 6% distribution and exposure to both the Energy and Materials sectors, which tendering shareholders will lose. The Board strongly believes that active management is extremely important in the current energy environment. The Fund’s high-quality investment team, which places an emphasis on risk control, positions the Fund to profit from a rebound in the energy markets. Selling shares during all-time market lows while paying a fee that is up to three times higher than actual costs is not in shareholders’ best interests. |
Press Release
Based on these and other considerations, the Board has determined that the hostile Offer is not in the long-term best interests of the Fund’s shareholders. The Board unanimously recommends that shareholders REJECT the Offer and not tender shares to the Group.
The Fund has filed this response to the hostile Offer with the U.S. Securities and Exchange Commission. It is available at www.sec.gov and on our website: adamsfunds.com.
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Since 1929, Adams Funds has consistently helped generations of investors reach their investment goals. Adams Funds is comprised of two closed-end funds, Adams Diversified Equity Fund, Inc. (NYSE: ADX) and Adams Natural Resources Fund, Inc. (NYSE: PEO). The Funds are actively managed by an experienced team with a disciplined approach and have paid dividends for more than 80 years across many market cycles. The Funds are committed to paying an annual distribution rate of 6% or more, providing reliable income to long-term investors. Shares can be purchased through our transfer agent or through a broker. For more information about Adams Funds, please visit: adamsfunds.com.
Contact:
Lyn Walther
Director of Shareholder Communications
800.638.2479 │ investorrelations@adamsfunds.com
500 East Pratt Street, Suite 1300, Baltimore, MD 21202 │ 410.752.5900 │ 800.638.2479 │ adamsfunds.com |