NexPoint is Deferring its Vote, Encourages
Shareholders to Take No Action on Merger Vote
to Compel Board to Properly Review Any Competing Proposal
Calls for UDF IV Board to Postpone March 4 Special Meeting by 30 Days and Engage
with
NexPoint to Ensure Best Outcome for Shareholders
DALLAS, Feb. 21,
2025 /PRNewswire/ -- NexPoint Real Estate
Opportunities, LLC (together with its affiliates "NexPoint") today
provided an update on its intentions with respect to its investment
in United Development Funding IV ("UDF IV" or "the Trust") ahead of
the Special Meeting of UDF IV Shareholders (the "Meeting"),
scheduled for March 4, 2025, to vote
on the proposed merger of UDF IV with Ready Capital (NYSE: RC) (the
"Ready Merger").
NexPoint has significant and growing concerns about the Ready
Merger, which was first announced days ahead of the Annual Meeting
and Board of Trustees election in December
2024. Since announcement of the Ready Merger, NexPoint's
ongoing assessment of the transaction has amplified those concerns,
leading to the conclusion that shareholders have no reason to
believe that the self-interested and entrenched Board, after years
of failing to protect shareholders' interests, would suddenly
change its behavior in pursuing, negotiating, approving and
recommending that shareholders vote to approve the Ready
Merger.
NexPoint's conclusion mirrors the findings of Glass Lewis in its
December 2024 report on UDF IV:
"That the board claims its current members and management team
are 'focused on protecting and enhancing shareholder value' is, in
our view, confounding."
NexPoint's Intent to Submit Competing Proposal and Impact to
Special Meeting:
Given NexPoint's fundamental concerns, which affect countless
aspects of the Ready Merger, NexPoint intends to submit a competing
proposal to the UDF IV Board of Trustees in advance of the Special
Meeting.
Updates on a competing proposal, when available, can be found
at udfaccountability.com
- Potential Impact to Special Meeting:
NexPoint strongly urges the UDF IV Board of Trustees to
protect shareholders by granting a short 30-day postponement of the
Special Meeting, moving it from March 4 to
April 4, 2025. This brief postponement would allow for the
Board to adequately review a competing proposal and engage with
NexPoint and other parties to deliver the best outcome for and
maximize value to shareholders.
This change would accommodate proper review and engagement of a
competing proposal, while ensuring the Ready Merger, if ultimately
deemed superior by the Board, could still be consummated prior to
April 15, 2025, the deadline for
which the Ready Merger is required to be consummated under the
merger agreement.
- Voting Considerations:
While NexPoint urges the Board to consider the
interests of its shareholders and postpone the Special Meeting to
conduct this review, NexPoint's previous attempts to engage the
Board have been either ignored or met with hostile public attacks.
As such, NexPoint has not yet voted on the proposed Ready Merger
and encourages shareholders to withhold their votes for the Special
Meeting, or withdraw any previously submitted votes, to compel the
Board to comply with this request and provide adequate
consideration and engagement in the best interests of
shareholders.
The Glass Lewis report further supports NexPoint's
fundamental concerns: "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."
Significant Issues in Ready Merger:
- Questionable Shareholder Economics:
UDF IV shareholders would receive a significant
percentage of their consideration in RC stock, which has suffered
from the portfolio's declining operating cash flow and resulting
series of distribution cuts, which Wall Street forecasts have
suggested may continue. The Ready Merger may create significant
additional selling pressure on Ready common stock, further eroding
the Ready Capital stock price and, consequently, the value received
by UDF IV shareholders as UDF IV shareholders seek to exit their
long-illiquid investment upon close.
- Disproportionate Benefits to UDF IV Board and Other
Insiders:
The Ready Merger provides significant benefits to the
Board, current and former management, the adviser, and UDF IV's
largest borrower that do not reflect the interest of UDF IV
shareholders. Through indemnifications, litigation adjustments, and
other terms, the Ready Merger provides a path for UDF IV leadership
and other bad actors to "wipe the slate clean" and completely avoid
accountability for almost ten years of harm caused to shareholders.
In turn, because of extensive indemnification provisions in the
Ready Merger Agreement, shareholders have limited ability to seek
repayment of misused shareholder funds and pursue other potential
recoveries, which could be in the tens of millions of dollars.
- Limited Shareholder Recovery Rights:
NexPoint believes a superior proposal requires limited
releases and indemnifications to protect shareholders' rights to
defend their interests and hold accountable those responsible for
the harm and value destruction experienced due to the
fraud, mismanagement, and governance failures at UDF
IV.
For More Information:
NexPoint encourages shareholders to
visit udfaccountability.com for more information.
Shareholders can complete the contact form on the site to receive
ongoing updates about UDF IV, the Ready Merger, and any competing
proposals.
About NexPoint
NexPoint Real Estate Opportunities, LLC is a wholly owned
subsidiary of NexPoint Diversified Real Estate Trust, Inc. (NYSE:
NXDT), a diversified real estate investment trust externally
advised by an affiliate of NexPoint Advisors, L.P.
NexPoint Advisors, L.P. is an SEC-registered adviser on the
NexPoint alternative investment platform. For more information
visit www.nexpoint.com
IMPORTANT INFORMATION
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include statements regarding
NexPoint's intention to submit a competing proposal to the Ready
Merger and other statements identified by words such as "expect,"
"intend," the negative version of these words and similar
expressions that do not relate solely to historical matters.
Forward-looking statements are based on NXDT's current expectations
and assumptions regarding capital market conditions, NXDT's
business, the economy and other future conditions. Forward-looking
statements are subject to risks, uncertainties and assumptions and
may be affected by known and unknown risks, trends, uncertainties
and factors that are beyond NXDT's control. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated or projected. Important factors
that could cause actual results to differ materially from those in
the forward-looking statements include regional, national or global
political, economic, business, competitive, market and regulatory
conditions, and those described in greater detail in our filings
with the Securities and Exchange Commission, particularly those
described in NXDT's Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q. Readers should not place undue reliance on
any forward-looking statements and are encouraged to review the
NXDT's Annual Report on Form 10-K and other filings with the SEC
for a more complete discussion of risks and other factors that
could affect any forward-looking statement. Any forward-looking
statement made in this press release speaks only as of the date on
which it is made. NXDT undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as required
by law.
CONTACT INFORMATION
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 Thomas: ir@nexpoint.com
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content:https://www.prnewswire.com/news-releases/nexpoint-provides-update-on-udf-ivs-proposed-merger-with-ready-capital-plans-to-submit-competing-proposal-302382075.html
SOURCE NexPoint Advisors, L.P.
