Railroad Ranch Capital Releases Letter to Nam Tai Property Shareholders

Rhea-AI Summary

Railroad Ranch Capital Management LP (RRCM), holding 4.5% of Nam Tai Property Inc. (NYSE: NTP), has expressed shareholder concerns regarding the company's governance. In an open letter dated June 16, 2020, RRCM criticized the influence of minority shareholder Kaisa Group Holdings Ltd. on company control without providing a control premium. The letter highlights issues with the independence of the Board of Directors and raises alarms about nepotism following the nomination of Aaron Kwok as a director. RRCM supports replacing the existing Board to ensure proper oversight and protect shareholder interests.

Positive

• None.

Negative

• Concerns over the practical control of the Company by minority shareholder Kaisa Group without compensating shareholders.
• Lack of confidence in the Board of Directors' ability to represent shareholder interests effectively.
• Nomination of Aaron Kwok to the Board raises nepotism concerns and his lack of relevant business experience undermines governance.
• Existing Board members may have conflicts of interest due to ties with Kaisa Group.

DALLAS, June 16, 2020 /PRNewswire/ -- Railroad Ranch Capital Management LP ("RRCM"), via funds we control, is currently a shareholder of Nam Tai Property Inc. (NYSE: NTP) ("Nam Tai" or the "Company"), owning approximately 4.5% via shares and derivatives. RRCM is releasing an open letter to NTP's shareholders regarding concerns over what appears to be the practical control of the Company that has been affected by minority shareholder Kaisa Group Holdings Ltd. (HKG: 1638) without compensating shareholders with a control premium. The full text of the letter can be accessed at http://www.railroadranchcapital.com/ntp and an excerpt is included below:

Shareholders:

We have been shareholders of Nam Tai since 2017 and believe the current market value of the stock significantly understates the value of its underlying real estate assets. We applaud the shareholder letter published by IsZo Capital ("IsZo") on May 27, 2020, and believe that the Board of Directors of the Company, as currently constituted, cannot provide confidence to shareholders that their interests will be properly looked after.

We have been in communication with the Board of Directors at Nam Tai regarding their corporate governance and their strategy for communicating with shareholders over the past several months, sharing many of the same concerns that IsZo laid out. Our letter from April, as well as the Company's response are available at railroadranchcapital.com/ntp.

New "Independent" Directors

A strong, truly independent Board of Directors is always important, but even more so when it is overseeing a company where the CEO has many potential conflicts of interest with the Shareholders. The Company is fond of citing the fact that their Board of Directors is comprised of a majority of Independent Directors as defined by the New York Stock Exchange's standards. We assert that, though Nam Tai complies with the technical requirements of the guidelines, that should provide you very little comfort. Due to their service as Board members of Kaisa Health, of which Kaisa Group owns 43%, and their lack of meaningful economic interests in the Company, it is difficult to put too much faith in the technical independence of Directors Vincent Fok and Dr. Aiping Lyu.

Mr. Kwok's Son Nominated to the Board

We sent our letter outlining governance and potential conflict of interest concerns to Nam Tai's Board on April 23rd. On April 30th, the Company filed it's 6-K providing the Notice of Annual Meeting of Shareholders. In that Notice, shareholders were informed that "Mr. Aaron Kwok", Ying Chi Kwok's son, was being nominated as a Director. Needless to say, this wasn't the kind of corporate governance change we were looking for. Aaron Kwok has no relevant business experience that would make him a qualified Director for the Company  and this was an attempt at old-fashioned nepotism. Subsequently, when the results from the annual meeting were announced, Aaron Kwok was not listed as a Director, but no explanation provided for what had happened to his nomination.

In conclusion, we believe that it is difficult to have faith in the current Board of Directors of Nam Tai to provide proper oversight of Mr. Kwok and his personal interests and those of his family. In order to guarantee proper governance and oversight, we, as investors, should demand a Board that diligently executes its fiduciary responsibility to look out for our interests, thus believe that there must be changes made and new Directors brought in. Given the Company's responses to our past concerns as well as their recent press release responding to the IsZo letter, the IsZo proposal to call a special meeting with thirty percent of the vote and replace the existing Board appears to be the most efficient and direct way of achieving this.    

View original content:http://www.prnewswire.com/news-releases/railroad-ranch-capital-releases-letter-to-nam-tai-property-shareholders-301077314.html

SOURCE Railroad Ranch Capital

FAQ

What concerns did Railroad Ranch Capital raise about Nam Tai Property Inc. (NTP)?

Railroad Ranch Capital raised concerns about the influence of Kaisa Group over Nam Tai's control without compensating shareholders, and questioned the effectiveness of the current Board of Directors.

Who is Railroad Ranch Capital and what is their stake in NTP?

Railroad Ranch Capital Management LP is a shareholder of Nam Tai Property Inc., owning approximately 4.5% of the company's shares and derivatives.

What was the reaction to Aaron Kwok's nomination to the Board of Nam Tai Property (NTP)?

Railroad Ranch Capital criticized the nomination of Aaron Kwok due to concerns over nepotism and his lack of relevant business experience.

What actions does Railroad Ranch Capital suggest for Nam Tai Property Inc. (NTP)?

They suggest that shareholders demand new directors to ensure better governance and oversight, following their concerns about the current Board's effectiveness.

What is the significance of the open letter released by RRCM on June 16, 2020?

The letter emphasizes governance issues at Nam Tai Property and calls for changes to protect shareholder interests amid concerns of conflict and inadequate oversight.