Filing under Rule 425 under the Securities Act
of 1933 and deemed filed under Rule 14a-12 of
the Securities Exchange Act of 1934
Filed by: SoftVest Advisors, LLC
Subject Company: Permian Basin Royalty Trust
SEC File No. of Permian Basin Royalty Trust: 001-8033
On May 18, 2026, SoftVest Advisors, LLC filed a Schedule 13D/A with
the U.S. Securities and Exchange Commission containing the following disclosure and related exhibits.
Item 4. Purpose of Transaction.
Item 4 of the Original Schedule 13D is hereby
amended and supplemented by adding the following:
SoftVest, L.P. (“SoftVest”) and Blackbeard Holdings, LLC
(“Blackbeard”) have agreed to a preliminary non-binding term sheet (the “Term Sheet”) that sets forth the proposed
high-level material terms and conditions governing a potential business combination of the Trust and certain Blackbeard assets (the “Transaction”).
The Term Sheet is attached as Exhibit 5 hereto and incorporated by reference herein.
The Term Sheet contemplates the formation of a new corporation organized
under the laws of Texas that will be listed on the NYSE and NYSE Texas (“New PubCo”). New PubCo would acquire and own (i)
all of the assets and operations of the Trust, and (ii) US Land Guild, LLC (“USLG”), a wholly owned subsidiary of Blackbeard
that will own approximately 66,500 acres of surface estate and a 15% royalty interest associated with certain acreage and certain mineral
interests currently owned by Blackbeard or one of its affiliates.
In exchange for the assets and entities contributed to New PubCo, (i)
Blackbeard and the unitholders of the Trust would each receive shares of common stock of New PubCo and (ii) Blackbeard or its affiliates
would receive certain working interests owned by the Trust following the conversion of net profits interests into a cost free 15% royalty
interest, including those associated with the “West Ranch” and “East Ranch” properties.
Immediately following the Transaction the former unitholders of the
Trust would own approximately 58% of New PubCo; and Blackbeard and its affiliates would own approximately 42% of New PubCo.
SoftVest has engaged Stephens Inc. as financial advisor who
provided assistance in negotiating the financial terms of the deal.
SoftVest is engaging in discussions with Blackbeard and its affiliates
solely in its capacity as a minority unitholder of the Trust, and neither SoftVest nor any of its affiliates, nor their respective directors,
officers or other representatives is acting on behalf of the Trust, its trustee or any other Trust unitholder.
The Term Sheet is non-binding and no definitive agreement has been
executed by SoftVest, Blackbeard or any of their respective affiliates. It is possible that no definitive agreement may be executed among
the parties on the terms described in the Term Sheet or at all. Completion of the Transaction is subject to, among other things, the negotiation
and execution of definitive agreements, satisfaction of closing conditions, receipt of required regulatory approvals, and approval by
a majority in interest of Trust unitholders constituting a quorum at a meeting of unitholders where a quorum is present.
If the Transaction is pursued, New PubCo may file with the Securities
and Exchange Commission (the “SEC”) a registration statement on Form S-4, which will include a proxy statement of the Trust
and a prospectus of New PubCo. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION. These documents will be available through the website maintained by the SEC at www.sec.gov.
SoftVest Advisors, LLC, together with certain of its affiliates and representatives, may be deemed to be participants in the solicitation
of proxies from unitholders of the Trust in connection with the proposed Transaction . To the extent required, information regarding the
identity of such persons and their direct or indirect interests in the proposed transaction, by security holdings or otherwise, will be
included in the proxy statement/prospectus and other relevant materials filed with the SEC when they become available. In addition, information
regarding the beneficial ownership of SoftVest Advisors, LLC and certain of its affiliates in the Trust is included in this Schedule 13D.
Exhibit 5 to the Schedule
13D of SoftVest Advisors, LLC
NON-BINDING TERM SHEET
FOR THE PROPOSED COMBINATION OF
US LAND GUILD, LLC AND PERMIAN BASIN ROYALTY
TRUST
This
non-binding term sheet (this “Term Sheet”) sets forth the proposed high-level material terms
and conditions governing a potential business combination transaction between Permian Basin Royalty Trust (“PBT”)
and US Land Guild, LLC (“USLG”), a wholly owned subsidiary of Blackbeard Holdings, LLC (“Blackbeard”).
USLG
and Blackbeard have been advised that SoftVest, L.P. (“SoftVest”) is engaging in these discussions
solely in its capacity as a minority unit holder of PBT, and that neither SoftVest nor any of its affiliates, nor their respective directors,
officers or other representatives is acting on behalf of PBT, its trustee or any other PBT unit holder.
The terms and provisions of this Term Sheet
are illustrative and intended solely as the basis for potential discussions and are not intended to be, and do not constitute, a legally
binding obligation with respect to a potential transaction in any respect. Each of SoftVest, USLG and Blackbeard disclaim any obligation
to negotiate with respect to the potential transaction and confirm that a legally binding obligation would only be made pursuant to a
definitive agreement negotiated and executed by the parties.
| Transaction
Structure1 |
· The
parties contemplate engaging in a series of transactions (the “Transactions”)
as set forth in Annex A, the result of which:
o A
new corporation organized under the laws of Texas that will be listed on the NYSE and NYSE Texas with a single class of publicly
traded common stock (such publicly traded corporation, “New PubCo” or “Combined Company”)
will be formed to acquire and own (i) all of the assets and operations of PBT, and (ii) USLG which, in turn, will own approximately
66,500 acres of surface estate and a 15% royalty interest associated with certain acreage and certain mineral interests currently
owned by Blackbeard or one of its affiliates.
o In
exchange for such assets and entities, (i) Blackbeard and the unitholders of PBT will each receive shares of common stock of
New PubCo and (ii) Blackbeard or its affiliates will receive certain working interests2
owned by PBT following the conversion of net profits interests, including those associated with the “West Ranch” and
“East Ranch” properties.
· The
final scope, valuation and mechanics of such asset contributions and transfers will be agreed in definitive documentation. |
| Pro
Forma Ownership |
· Immediately
following the Transactions (i) the former unitholders of PBT would own approximately 58% of New PubCo; and (ii) Blackbeard and
its affiliates would own approximately 42% of New PubCo. |
| Debt
Facility |
· Approximately
$80 million of indebtedness owed by USLG would become the obligation of the Combined Company in connection with the Transactions. |
1
Note: Transaction structure, including incorporation of Up-C, remains subject to continuing tax review.
2
Note: The PBT working interests will be subject to a 15% royalty burden.
| Board
of Directors |
· Blackbeard
and SoftVest to enter into a mutually agreed upon shareholders’ agreement (the “Shareholders’
Agreement”), providing for (among other things) the board designation rights
described herein.
· For
so long as Blackbeard owns more than 25%, the board of directors of New PubCo following the Transactions would be made up of seven
members as follows:
○ two
directors designated by Blackbeard
○ one
management director (CEO of New PubCo)
○ four
independent directors comprised of: (i) Eric Oliver (to concurrently serve as Chairman of the Board), (ii) two independent directors
(one of whom can chair the Audit Committee) mutually agreeable to Blackbeard and SoftVest (with the understanding that each of Blackbeard’s
and SoftVest’s consent to such designations shall not be unreasonably withheld) and (iii) one SoftVest designee whose affiliate
owns at least 5% of New PubCo
· Director
nomination rights:
○ If
Blackbeard owns between 25% and 50%, it can nominate no more than two directors.
○ If
Blackbeard owns between 10% and 25%, it can nominate one director.
○ For
so long as SoftVest and its affiliates beneficially own at least 5% of New PubCo's outstanding voting securities, SoftVest can nominate
one director.
· The
board will not be classified.
· Directors
to be elected by majority of votes cast, with mandatory resignation policy. |
| Acquisition
Advisory Committee |
· Combined
Company will install an acquisition advisory committee modeled after the same or similar committee at Texas Pacific Land Corporation
(NTSE: TPL) (the “Advisory Committee”). The Advisory Committee will be comprised of the named officers
of the Combined Company, plus, for so long as SoftVest owns 5% or more of the issued and outstanding shares of Combined Company,
a SoftVest designee (who may be someone not sitting on the Board) and for so long Blackbeard owns 5% or more of the issued and outstanding
shares of the Combined Company, a Blackbeard designee. The Advisory Committee will meet no less than monthly to review, discuss,
and make decisions related to future surface and mineral acquisitions by Combined Company. |
| Officers |
· Certain
officers of Blackbeard would serve as the officers of New PubCo and would continue to serve
as the officers of USLG following the Transactions as set forth below.
○ Jordan
Barrett (Chief Executive Officer)
○ [TBD]
(Chief Financial Officer)
○ Ricky
Torlincasi (General Counsel and Secretary) |
| Master
Services Agreement |
· The
Combined Company will enter into a master services agreement (an “MSA”)
with an affiliate of Blackbeard pursuant to which such affiliate will provide management,
operational, sourcing, administrative and strategic services to the Combined Company. As
consideration for such services, the Combined Company will reimburse Blackbeard's affiliate
$5.0 million per year for the first fiscal year of Combined Company (an “Management
Fee”). The Management Fee will be reviewed and, if necessary, updated annually
by the Combined Company’s board to reflect changes in the scope of services provided
or the Combined Company's operations. The MSA will contain customary, arm’s length
provisions relating to indemnification, limitations on liability and termination and will
constitute a related-party transaction subject to Combined Company’s related-party
transactions policy.
· The
Management Fee is not intended to cover direct costs, including those associated with the operation of a public company (e.g., those
associated with audit, tax, SOX compliance, investor relations, independent director’s fees, etc.). Additionally, the MSA is
not intended to cover compensation, benefits, payroll taxes, and other employment-related costs and obligations associated with the
Combined Company’s own employees, if any. |
| Management
Compensation |
· The
Combined Company will establish a Long-Term Incentive Plan (“LTIP”)
for directors, officers, employees and other service providers of the Combined Company providing
for grants of restricted stock and performance shares of New PubCo.
· The
design, size and allocation of awards under the LTIP will be benchmarked against a peer group of comparable public companies and
structured to be consistent with market practices for such peer group. The peer group, LTIP structure, initial grants, and annual
award levels will be subject to approval by the Compensation Committee of the New PubCo Board.
· The
LTIP Pool will utilize a mix of both restricted stock and performance shares and be subject to vesting regimes and other terms consistent
with market practice. The Compensation Committee of the New PubCo Board will retain sole authority to approve all LTIP awards to
executive officers and directors of New PubCo. The Compensation Committee will additionally authorize an annual aggregate pool of
LTIP awards available for grant from the LTIP Pool to individuals who are not executive officers or directors of New PubCo (the “Non-Executive
LTIP Pool”). Mechanism for allocation of the Non-Executive LTIP Pool to be included in definitive documentation. |
| Blackbeard-Specific
Transfers and Voting Rights; Consent Rights |
· The
Shareholders’ Agrement shall include the transfer restrictions, voting rights and consent
rights described herein. Parties to also discuss inclusions of ROFRs/ROFOs.
· Following
expiration of the initial lock-up period, any sale or transfer of New PubCo shares by Blackbeard
representing more than 5% of shares outstanding in any 12-month period must be conducted
through an underwritten offering with a mutually agreed bookrunning manager, providing New
PubCo's board with no less than two business days' prior written notice and the opportunity
to participate as a primary issuer in such offering. |
| |
· If
any Blackbeard sale or transfer results in a new significant shareholder,3
such shareholder will execute a joinder to the Shareholders’ Agreement, binding such
transferee shareholder to the terms contained therein.
· All
registered secondary offerings will be conducted in good faith consultation with New PubCo's board with respect to timing, size and
marketing approach, with the objective of minimizing market disruption.
· Blackbeard
and its controlled affiliates cannot complete transactions with New PubCo without complying with the Combined Company’s related-party
transactions policy, which is expected to require the prior approval of a majority of independent directors with respect to certain
categories of transactions.
· Any
material transactions4 by New PubCo shall require the
affirmative vote of a majority of the board of directors and will require compliance with New PubCo’s “conflicts of interest”
or similar policy.
· For
so long as Blackbeard owns more than 25% of shares outstanding in the Combined Company, the MSA and Management Fee shall remain in
place. Once Blackbeard’s ownership falls below the 25% threshold, the Combined Company board may renegotiate the MSA and Management
Fee with Blackbeard. |
| Registration
Rights |
· Blackbeard
would receive customary registration rights with respect to its shares of New PubCo, including demand and piggyback registration
rights. |
| Lock-Up
and Transfer Coordination |
· Blackbeard
would agree to customary lock-up restrictions following the Transactions.
· Parties
to agree on any lock-up agreements required from any holder of more than 5% of the outstanding New PubCo common stock to preserve
the desired tax treatment of the Transactions. |
| Corporate
Opportunities |
· The
governing documents of the Combined Company would include customary corporate opportunity waiver provisions permitting Blackbeard
and its affiliates (including NGP and its portfolio companies) to pursue any business activity. |
| Other
Governance Provisions |
· New
PubCo charter to provide for blank check preferred stock.
· Shareholders
will have the right to call special meetings (25% threshold).
· Opt-out
of Subchapter D of the Texas Business Organizations Code (control share acquisition statute) and Subchapter M of the Texas Business
Organizations Code (business combination statute).
· Exclusive
forum: Texas. |
3
Note: Definitive agreements to define significance test.
4
Note: Scope of “material transaction” to be finalized in the definitive documentation.
| Transaction
Expenses |
· All
expenses for the Transactions (other than those associated with the preparation and filing
of SEC Form S-4) would be borne by the Combined Company, subject to a cap mutually agreed
by SoftVest and Blackbeard.
· The
costs and expenses associated with the preparation and filing of SEC Form S-4 would be borne by SoftVest and Blackbeard equally;
provided, that, upon the successful consummation of the Transactions, the Combined Company would reimburse SoftVest and Blackbeard
for such expenses. |
| Survival
of Rights |
· All
rights granted to Blackbeard would survive any change of control of Blackbeard, including any transfer of all or part of the direct
or indirect ownership of Blackbeard to a continuation vehicle or similar investment vehicle managed by NGP. |
| Conditions
to Closing |
· The
Transactions would be subject to customary closing conditions including execution of definitive documentation, receipt of regulatory
approvals and approval by the applicable unitholders of PBT. |
Important Information and Where to Find It; Participants in the
Solicitation
This communication is being filed pursuant to Rule 425 under the Securities
Act of 1933, as amended, and is deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934, as amended.
If the proposed transaction described herein is pursued, a newly formed
entity (“NewCo”) may file with the Securities and Exchange Commission (the “SEC”) a registration statement on
Form S-4, which will include a proxy statement of Permian Basin Royalty Trust (“PBT”) and a prospectus of NewCo. INVESTORS
AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. These documents will
be available through the website maintained by the SEC at www.sec.gov.
SoftVest Advisors, LLC, together with certain of its affiliates and
representatives, may be deemed to be participants in the solicitation of proxies from unitholders of the Trust in connection with the
proposed transaction. To the extent required, information regarding the identity of such persons and their direct or indirect interests
in the proposed transaction, by security holdings or otherwise, will be included in the proxy statement/prospectus and other relevant
materials filed with the SEC when they become available. In addition, information regarding the beneficial ownership of SoftVest Advisors,
LLC and certain of its affiliates in PBT is included as Item 5 to the Schedule 13D of SoftVest Advisors, LLC and certain other reporting
persons filed on October 10, 2025, as amended.
