NexPoint Provides Update on UDF IV's Proposed Merger with Ready Capital, Plans to Submit Competing Proposal
NexPoint Real Estate Opportunities announced plans to submit a competing proposal against the proposed merger between United Development Funding IV (UDF IV) and Ready Capital (RC). NexPoint is urging UDF IV's Board to postpone the March 4, 2025 Special Meeting by 30 days to April 4, 2025, allowing proper review of competing proposals while maintaining the April 15 merger deadline.
NexPoint expressed significant concerns about the Ready Merger, citing questionable shareholder economics and disproportionate benefits to UDF IV insiders. The current deal structure would have UDF IV shareholders receive considerable RC stock, which has experienced declining operating cash flow and distribution cuts. The merger agreement includes extensive indemnification provisions that could limit shareholders' ability to seek repayment of misused funds.
NexPoint is deferring its vote and encourages shareholders to withhold or withdraw their votes to compel the Board to properly review any competing proposals.
NexPoint Real Estate Opportunities ha annunciato l'intenzione di presentare una proposta concorrente contro la fusione proposta tra United Development Funding IV (UDF IV) e Ready Capital (RC). NexPoint sta esortando il Consiglio di UDF IV a posticipare la Riunione Straordinaria del 4 marzo 2025 di 30 giorni, al 4 aprile 2025, per consentire una corretta revisione delle proposte concorrenti, mantenendo comunque la scadenza per la fusione del 15 aprile.
NexPoint ha espresso preoccupazioni significative riguardo alla fusione con Ready, citando questioni relative all'economia degli azionisti e benefici sproporzionati per i membri interni di UDF IV. L'attuale struttura dell'accordo prevede che gli azionisti di UDF IV ricevano una considerevole quantità di azioni RC, che ha registrato un calo del flusso di cassa operativo e tagli nelle distribuzioni. L'accordo di fusione include ampie disposizioni di indennizzo che potrebbero limitare la capacità degli azionisti di richiedere il rimborso di fondi mal utilizzati.
NexPoint sta rinviando il proprio voto e incoraggia gli azionisti a trattenere o ritirare i propri voti per costringere il Consiglio a esaminare adeguatamente eventuali proposte concorrenti.
NexPoint Real Estate Opportunities anunció planes para presentar una propuesta competitiva contra la fusión propuesta entre United Development Funding IV (UDF IV) y Ready Capital (RC). NexPoint está instando a la Junta de UDF IV a posponer la Reunión Especial del 4 de marzo de 2025 por 30 días, hasta el 4 de abril de 2025, permitiendo una revisión adecuada de las propuestas competitivas mientras se mantiene la fecha límite de fusión del 15 de abril.
NexPoint expresó preocupaciones significativas sobre la fusión con Ready, citando cuestionables aspectos económicos para los accionistas y beneficios desproporcionados para los miembros internos de UDF IV. La estructura actual del acuerdo haría que los accionistas de UDF IV reciban una considerable cantidad de acciones de RC, que ha experimentado una disminución en el flujo de caja operativo y recortes en las distribuciones. El acuerdo de fusión incluye amplias disposiciones de indemnización que podrían limitar la capacidad de los accionistas para buscar el reembolso de fondos mal utilizados.
NexPoint está aplazando su voto y anima a los accionistas a retener o retirar sus votos para obligar a la Junta a revisar adecuadamente cualquier propuesta competitiva.
NexPoint 부동산 기회가 United Development Funding IV (UDF IV)와 Ready Capital (RC) 간의 제안된 합병에 대한 경쟁 제안을 제출할 계획을 발표했습니다. NexPoint는 UDF IV 이사회에 2025년 3월 4일 특별 회의를 30일 연기하여 2025년 4월 4일로 미루고, 경쟁 제안에 대한 적절한 검토를 허용하면서 4월 15일 합병 기한을 유지할 것을 촉구하고 있습니다.
NexPoint는 Ready 합병에 대해 상당한 우려를 표명하며, 의심스러운 주주 경제와 UDF IV 내부자에게 불균형한 혜택을 지적했습니다. 현재 거래 구조에서는 UDF IV 주주가 상당한 RC 주식을 받게 되며, 이는 운영 현금 흐름 감소와 배당금 삭감을 경험했습니다. 합병 계약에는 잘못 사용된 자금의 상환을 요청할 수 있는 주주들의 능력을 제한할 수 있는 광범위한 면책 조항이 포함되어 있습니다.
NexPoint는 자신의 투표를 연기하고 주주들이 투표를 보류하거나 철회하여 이사회가 모든 경쟁 제안을 적절히 검토하도록 촉구하고 있습니다.
NexPoint Real Estate Opportunities a annoncé son intention de soumettre une proposition concurrente contre la fusion proposée entre United Development Funding IV (UDF IV) et Ready Capital (RC). NexPoint exhorte le Conseil d'UDF IV à reporter la Réunion Extraordinaire du 4 mars 2025 de 30 jours au 4 avril 2025, afin de permettre un examen adéquat des propositions concurrentes tout en maintenant la date limite de fusion du 15 avril.
NexPoint a exprimé des préoccupations significatives concernant la fusion avec Ready, citant des économies d'actionnaires douteuses et des avantages disproportionnés pour les initiés d'UDF IV. La structure actuelle de l'accord ferait en sorte que les actionnaires d'UDF IV reçoivent une quantité considérable d'actions de RC, qui a connu une diminution de son flux de trésorerie opérationnel et des réductions de distribution. L'accord de fusion comprend d'importantes dispositions d'indemnisation qui pourraient limiter la capacité des actionnaires à demander le remboursement de fonds mal utilisés.
NexPoint reporte son vote et encourage les actionnaires à retenir ou retirer leurs votes pour contraindre le Conseil à examiner correctement les propositions concurrentes.
NexPoint Real Estate Opportunities hat Pläne angekündigt, einen konkurrierenden Vorschlag gegen die vorgeschlagene Fusion zwischen United Development Funding IV (UDF IV) und Ready Capital (RC) einzureichen. NexPoint drängt den Vorstand von UDF IV, die außerordentliche Sitzung am 4. März 2025 um 30 Tage auf den 4. April 2025 zu verschieben, um eine angemessene Überprüfung der konkurrierenden Vorschläge zu ermöglichen und gleichzeitig die Fusionsfrist am 15. April einzuhalten.
NexPoint äußerte erhebliche Bedenken hinsichtlich der Ready-Fusion und verwies auf fragwürdige Aktionärsökonomien und unverhältnismäßige Vorteile für Insider von UDF IV. Die aktuelle Vertragsstruktur würde es den Aktionären von UDF IV ermöglichen, beträchtliche RC-Aktien zu erhalten, die einen Rückgang des operativen Cashflows und Kürzungen bei den Ausschüttungen erfahren haben. Der Fusionsvertrag enthält umfangreiche Entschädigungsbestimmungen, die die Fähigkeit der Aktionäre einschränken könnten, Rückzahlungen für missbrauchte Mittel zu verlangen.
NexPoint verschiebt seine Stimme und ermutigt die Aktionäre, ihre Stimmen zurückzuhalten oder zurückzuziehen, um den Vorstand zu drängen, alle konkurrierenden Vorschläge angemessen zu prüfen.
- None.
- Ready Capital stock has suffered from declining operating cash flow
- Ready Capital has experienced a series of distribution cuts
- Merger may create significant selling pressure on Ready Capital stock
- Extensive indemnification provisions limit shareholders' ability to seek repayment of misused funds
- Shareholders could lose potential recoveries worth tens of millions of dollars
Insights
This merger situation presents a complex web of corporate governance concerns and shareholder rights issues that warrant careful scrutiny. The timing of the Ready Merger announcement, coming just days before the Annual Meeting, raises red flags about the board's strategic intentions and commitment to shareholder interests.
Glass Lewis's critical assessment of UDF IV's board governance provides independent validation of these concerns. Their report specifically questions the board's credibility in negotiating such a transformative transaction, highlighting a pattern of problematic governance practices.
The merger structure presents several concerning elements:
- The significant stock component of the consideration exposes UDF IV shareholders to Ready Capital's declining operating cash flow and distribution cuts
- The extensive indemnification provisions effectively limit shareholders' ability to pursue potential recoveries estimated in the tens of millions of dollars
- The merger terms appear to disproportionately benefit insiders while potentially disadvantaging regular shareholders
NexPoint's request for a 30-day postponement is particularly significant as it would still allow the Ready Merger to meet its April 15 deadline while providing time for proper evaluation of alternatives. This timeline management suggests a strategic approach to maximizing shareholder options without jeopardizing the existing deal structure.
The potential competing proposal from NexPoint introduces a critical dynamic that could fundamentally alter the merger landscape. Their focus on limiting releases and indemnifications indicates a shareholder-centric approach that contrasts with the current merger terms.
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
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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SOURCE NexPoint Advisors, L.P.
FAQ
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