IsZo Capital Issues Letter to Nam Tai Shareholders Regarding Status of Lawsuit to Invalidate the Company’s Dilutive Private Placement

Rhea-AI Summary

IsZo Capital Management, holding approximately 11% of Nam Tai Property's shares, has filed a lawsuit against the Company and Kaisa Group after a controversial $170 million private placement. This legal action aims to contest the dilution and restore shareholder rights, including a Special Meeting to elect a new Board. The Eastern Caribbean Supreme Court has granted an injunction and set a trial date for January 29, 2021. IsZo believes the placement undermines corporate governance and aims to invalidate it, reinforcing their commitment to enhancing shareholder value at Nam Tai.

Positive

• IsZo secured an injunction from the Eastern Caribbean Supreme Court to protect shareholders during the litigation process.
• The trial to assess the validity of the private placement is scheduled for January 29, 2021.
• West Ridge has agreed to abide by the Court's ruling, not defending the legal proceedings.
• IsZo has a strategic plan in place for enhancing corporate governance and unlocking value at Nam Tai.

Negative

• The private placement resulted in a 40% decline in share price, signaling market discontent.
• The lawsuit implies ongoing governance issues and shareholder dissatisfaction with the current Board's decisions.

IsZo Capital Management LP (together with its affiliates, “IsZo”), a long-term shareholder of Nam Tai Property Inc. (NYSE: NTP) (“Nam Tai” or the “Company”) with beneficial ownership of approximately 11% of the Company’s outstanding shares,¹ today issued the below letter to shareholders regarding its lawsuit in the Eastern Caribbean Supreme Court against Nam Tai, Kaisa Group Holdings Limited’s (HKG: 1638) wholly-owned subsidiary Greater Sail Limited and West Ridge Investment Company Limited.

In an effort to continue providing shareholders with transparency into our efforts at Nam Tai and address the many questions we have received since commencing litigation in response to the dilutive private placement, IsZo has made public its statement of claim and other helpful materials at www.FixNTP.com/resources.

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January 12, 2021

Fellow Shareholders,

You are likely aware that IsZo Capital LP (together with its affiliates, “IsZo” or “we”) filed a lawsuit against Nam Tai Property Inc. (“Nam Tai” or the “Company”) in October 2020 after the Company announced a $170 million private placement that distributed more than 16 million common shares to Kaisa Group Holdings Limited’s (“Kaisa”) wholly-owned subsidiary Greater Sail Limited (“Kaisa-Greater Sail”) and more than 2.6 million common shares to West Ridge Investment Company Limited (“West Ridge”). Our lawsuit contends that the Kaisa allies currently in control of Nam Tai initiated this dilutive and unjustifiable transaction in response to IsZo obtaining requisite support to convene a meeting of shareholders (the “Special Meeting”), whereat investors could vote to reconstitute the Company’s Board of Directors (the “Board”). Today’s communication intends to deliver an update on the legal process and reinforce our unwavering commitment to facilitating necessary change atop Nam Tai.

We believe there are several key points in the legal process shareholders should be aware of:

• The Eastern Caribbean Supreme Court (the “Court”) initially granted IsZo’s request for an injunction designed to protect shareholders as the legality of the transaction is contested. Nam Tai has since agreed to provide certain undertakings to the Court imposing restrictions similar to an injunction for the duration of the litigation process. Shareholders should feel confident that Nam Tai’s ability to take further value-destructive actions is restricted.
  
  
• The trial regarding the validity of the private placement is scheduled to commence on January 29, 2021. IsZo has retained highly-qualified legal advisors to represent us before the Court. Our goal is to invalidate the private placement and have the Special Meeting convened that approximately 40% of shareholders – including one of Nam Tai’s current directors – demanded.
  
  
• The Court is expected to conclude the trial in February. If the Court invalidates the transaction or renders a similarly favorable ruling, IsZo expects the Special Meeting to be convened shortly after Judgment is delivered.
  
  
• West Ridge has agreed to be bound by the Court’s ruling with respect to the private placement and will not defend the legal proceedings. IsZo is pleased with this positive development and has stayed its legal proceedings against West Ridge.

IsZo intends to demonstrate to the Court that Nam Tai’s private placement represents an egregious entrenchment maneuver intended to strengthen Kaisa’s grip on the Company by preventing long-suffering shareholders from achieving boardroom change at the Special Meeting. We firmly reject the Board’s claim that Nam Tai needed to raise new capital to address lenders’ purported concerns regarding potential changes in Board control. It is standard practice across the global real estate sector for loans to be secured by physical assets or properties, effectively providing lenders with valuable collateral and security amidst leadership changes and transformative events. Notably, Nam Tai repeatedly touted its stable financial position and cash flows in public communications before announcing the private placement, making it even more apparent that the true impetus for the $170 million transaction was Kaisa’s desire to retain control of the Company in the face of widespread shareholder discontent.

Given that the Kaisa-dominated Board’s brazen maneuver was followed by an approximate 40% share price decline, the marketplace seemed to quickly reach similar conclusions about this highly-questionable private placement. We appreciate the outreach from many shareholders in recent months to ask questions about the legal process and encourage us to not back down. The marketplace can rest assured that IsZo will not be deterred or intimidated by Kaisa’s attempts to undermine corporate democracy.

IsZo has retained expert legal advisors to guide us through proceedings in the British Virgin Islands and whatever else arises with Nam Tai. Our slate of ethical, experienced and highly-qualified director candidates remain ready and willing to enter the boardroom. Our six director candidates have the right strategic vision for unlocking the intrinsic value of Nam Tai’s portfolio, which may be worth up to $40 per share based on the Company’s own valuation reports.

Unlike the Kaisa-controlled Board, our slate has been focused on developing the right plan for creating meaningful value at Nam Tai. Our public letter dated September 18, 2020 summarized steps that include:

• Improving corporate governance and enhancing the Board’s alignment with shareholders.
• Installing a proven, China-based, high-caliber management team.
• Retaining local advisors to support project-level continuity in Shenzhen and Dongguan.
• Establishing a disciplined capital allocation approach.
• Commencing a credible strategic review of the current project portfolio.

We intend to continue investing energy, resources and time into our legal action against Nam Tai to protect the best interests of shareholders. The market’s overwhelmingly positive reaction to our public efforts last summer demonstrates that investors realize the potential buried within Nam Tai’s underperforming shares and yearn for the change we are seeking to deliver. IsZo remains 100% committed to the process and is not going anywhere.

We will continue to provide appropriately-timed updates on our legal efforts when permissible. Thank you for your support.

Sincerely,

Brian Sheehy
IsZo Capital Management LP

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Shareholders interested in learning more about IsZo’s action and the overall Special Meeting process should contact our solicitor, Saratoga Proxy Consulting, at info@saratogaproxy.com or (212) 257-1311. We also encourage shareholders to learn more about our slate and its strategic vision by visiting www.FixNTP.com.

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1

Based upon 39,197,991 shares outstanding immediately prior to the disputed private placement.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210112005339/en/

FAQ

What is the lawsuit against Nam Tai Property Inc. about?

IsZo Capital's lawsuit against Nam Tai challenges a $170 million dilutive private placement intended to strengthen Kaisa's control over the Company.

When is the trial regarding the Nam Tai lawsuit scheduled?

The trial is set to commence on January 29, 2021.

What was the market reaction to the private placement by Nam Tai?

Following the private placement, Nam Tai's share price declined by approximately 40%.

How much of Nam Tai's shares does IsZo Capital own?

IsZo Capital owns around 11% of Nam Tai Property Inc.'s outstanding shares.

What are the expected outcomes of the IsZo lawsuit?

IsZo aims to invalidate the private placement and facilitate a Special Meeting to reconstitute the Board.