UDF IV's Plan "Not to Reconvene the Annual
Meeting" is Unacceptable Outcome for Shareholders
NexPoint Urges UDF IV to Reconvene Meeting
Following Full Disclosure of Ready Capital Transaction Details and
to Disclose Amount of Shareholder Funds Used on Advisors for an
Annual Meeting it has Failed to Hold
DALLAS, Dec. 12,
2024 /PRNewswire/ -- NexPoint Real Estate
Opportunities, LLC (together with its affiliates "NexPoint") today
issued a statement regarding the "adjournment" of the United
Development Funding IV ("UDF IV" or the "Company") Annual Meeting
of Shareholders ("Annual Meeting") due to a lack of quorum and the
Company's statement that it will not reconvene the Meeting.
NexPoint provided the following comment:
"We are deeply alarmed by UDF IV's announcement
that it will not reconvene the Annual Meeting after failing to meet
the quorum threshold. This decision exemplifies UDF IV's governance
failures and unwillingness to engage with shareholders. This
outcome also raises serious concerns about the current Board's
ability to protect shareholder interests in the context of the
proposed acquisition by Ready Capital (NYSE: RC). UDF IV's decision
appears predicated on the assumption that the Ready Capital deal
will close before the next Annual Meeting, suggesting they may seek
to avoid holding its first contested annual meeting and Trustee
election in nine years.
"We call on UDF IV to reconvene the Annual
Meeting in accordance with the Company's bylaws within 120 days
after the record date, but only after providing shareholders with
the disclosures necessary to assess the proposed transaction,
including previously omitted disclosure schedules, recent
financials, the proxy statement and many other material details. We
also call on UDF IV to obtain a non-objecting beneficial owners
(NOBO) list to ensure greater shareholder oversight and
engagement."
As stated, NexPoint declined to appear at the Annual Meeting due
to concerns over the Company's last-minute announcement of the
proposed Ready Capital merger, which appeared to be an attempt to
sway the Annual Meeting's outcome without providing shareholders
the necessary information to evaluate the proposed transaction.
NexPoint would support the acquisition if full disclosure is
presented, including current financials, and the transaction terms
are fair.
Independent proxy advisory firm Glass Lewis shares NexPoint's
concerns about UDF IV's disclosure deficiencies and the Ready
Capital deal:
"While we understand a transaction of this
nature could be viewed as something of a panacea for investors
dissatisfied with the Trust's longstanding lack of liquidity and
poor corporate governance, we believe shareholders have ample cause
to question the timing of the transaction, the absence of key
disclosures and, most fundamentally, the board's ability to
credibly negotiate and secure a transformative transaction of this
nature. That such an agreement would be executed less than two
weeks prior to the Trust's first substantive election of directors
in nearly ten years is more alarming still, and, in our view,
further stokes concern about the board's true commitment to good
governance and shareholder feedback." 1
NexPoint believes the Annual Meeting vote was a dead heat –
certainly much closer than reported by UDF IV – demonstrating
significant shareholder dissatisfaction with UDF IV's leadership.
The Company exploited the purpose of the Annual Meeting and
positioned it as a referendum on the merger to sway votes, which
indeed caused some shareholders to change their vote in favor of
the Company just days before the election.
Glass Lewis states:
"With the first meaningful board referendum in
nearly a decade on the near-term docket — in this instance,
seemingly only as a result of legal action in Maryland by NexPoint — UDF has notionally
elevated the stakes by announcing a prospective acquisition of the
Trust by Ready Capital in a partially contingent cash, stock and
CVR transaction executed just eight days prior to the forthcoming
AGM."1
UDF IV has actively suppressed shareholder engagement, refusing
any constructive dialogue with NexPoint. To avoid accountability,
the Company first spent significant shareholder funds to prevent
this meeting from occurring. Then, once a Maryland court ordered it to hold this
meeting, it took no steps to obtain the NOBO list representing
approximately 24 million of UDF IV's 30 million shares, which would
have enabled them to advise those shareholders directly about the
first election of independent trustees in nine years. They later
fought NexPoint's efforts to obtain such a list, but spent
significant shareholder funds on high-priced attorneys and public
relations firms to advance their agenda. NexPoint now calls on UDF
IV to disclose the costs borne by shareholders related to the
Annual Meeting (and efforts to avoid it) the Company now suggests
it may never hold.
Shareholders are entitled to information from UDF IV to make
their own decisions about the current Trustees and the proposed
merger and deserve the opportunity to hold the Trustees accountable
for years of value erosion and lost trust in favor of NexPoint's
independent nominees. We encourage UDF IV shareholders to contact
the Company to demand they reconvene the shareholder meeting,
publish information on the merger, then meaningfully engage with
NexPoint and other shareholders to answer their questions.
(1) Glass, Lewis & Co., LLC.: United Development Funding
IV. December 6, 2024.
About NexPoint
NexPoint Real Estate Opportunities, LLC is a wholly owned
subsidiary of NexPoint Diversified Real Estate Trust, Inc. (NYSE:
NXDT), an affiliate of NexPoint Advisors, L.P.
NexPoint Advisors, L.P. is an SEC-registered adviser on the
NexPoint alternative investment platform. It serves as the adviser
to a suite of funds and investment vehicles, including a closed-end
fund, interval fund, business development company, and various real
estate vehicles. For more information visit www.nexpoint.com
IMPORTANT INFORMATION
NexPoint Real Estate Opportunities, LLC ("NexPoint") has
delivered a proxy statement with respect to its solicitation of
proxies for nominees to be elected to the United Development
Funding IV ("UDF IV") Board of Trustees at the Annual Meeting of
Shareholders of UDF IV. INVESTORS AND SECURITY HOLDERS ARE URGED TO
READ THE NEXPOINT PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) IN ITS ENTIRETY. Copies of the documents are
available free of charge from NexPoint by accessing the website
www.udfaccountability.com.
NexPoint, its affiliates, their directors and executive officers
and other members of management and employees may be participants
(collectively "Participants") in the solicitation of proxies by
NexPoint. Information about NexPoint's nominees to the UDF IV Board
of Trustees and information regarding the direct or indirect
interests in UDF IV, by security holdings or otherwise, of
NexPoint, the other Participants and NexPoint's nominees will be
available in the proxy statement. NexPoint's disclosure of any
security holdings will be based on information made available to
NexPoint by such Participants and nominees. UDF IV is no longer
subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended. Consequently, NexPoint's knowledge of
significant security holders of UDF IV and as to UDF IV itself is
limited.
NexPoint has neither sought nor obtained consent from any third
party to use previously published information in this press
release, including any quotes used in this press release.
CONTACT INFORMATION
UDF IV Investor Contacts
Chuck Garske / Jeremy Provost / Theo
Caminiti (Okapi Partners):
Email: info@okapipartners.com
Phone: (212) 297-0720
For Additional Information/Updates on UDF IV
Website: www.udfaccountability.com
Email: udfinvestors@nexpoint.com
Media Contacts
Lucy Bannon (NexPoint):
lbannon@nexpoint.com
Paul Caminiti/Pamela Greene (Reevemark):
nexpointteam@reevemark.com
NexPoint Investor Relations
Kristen Griffith:
ir@nexpoint.com
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SOURCE NexPoint Advisors, L.P.