NexPoint Sends Letter to United Development Funding IV (UDF IV) Shareholders in Advance of Court-Ordered Annual Meeting
NexPoint Real Estate Opportunities has sent a letter to shareholders of United Development Funding IV (UDF IV) ahead of the Court-ordered Annual Meeting to be held by December 31, 2024. The letter emphasizes the need to restore accountability and transparency following criminal convictions of former management team members. NexPoint plans to nominate four independent trustees to replace incumbents accused of violating fiduciary duties. The goal is to improve corporate governance and provide a path to liquidity for shareholders. Shareholders are encouraged to stay informed by visiting udfaccountability.com.
- Court order mandates UDF IV to hold an Annual Meeting by December 31, 2024.
- NexPoint intends to nominate four independent trustees to improve governance.
- NexPoint's actions have led to the upcoming Annual Meeting, offering a chance for change.
- Nominees are said to have decades of relevant professional experience.
- Efforts are aimed at restoring accountability and establishing a path to liquidity.
- UDF IV's former executives convicted of fraud, resulting in multimillion-dollar fines and prison sentences.
- Incumbent trustees accused of violating fiduciary duties and advancing their own interests.
- Governance failures have resulted in a de-registered, illiquid stock.
- Incumbents changed bylaws to entrench themselves and disenfranchise shareholders.
- Board allowed the advisor and management team to remain despite fraud revelations.
Insights
The upcoming Annual Meeting of Shareholders at United Development Funding IV (UDF IV) presents a significant opportunity for shareholders to address long-standing governance issues. A important element here is the nomination of new, independent trustees. This development is particularly relevant given the history of fraud and mismanagement allegations against former executives. Restoring accountability can lead to substantial changes in how the REIT operates, potentially improving transparency and trust among investors.
The appointment of independent trustees can create a governance structure that prioritizes shareholder interests rather than management's. This could include better oversight, enhanced corporate governance practices and more stringent checks and balances. In the short term, this might mean a shift in management strategy and possibly some upheaval as new trustees settle in. In the long term, improved governance can enhance investor confidence, potentially attracting new investors and stabilizing the share price.
The key financial takeaway here is the potential pathway to recovering value for shareholders, who have long suffered from stagnated stock liquidity and governance-related issues. A change in the board could lead to a reevaluation of the company's assets and perhaps more strategic decisions aimed at enhancing liquidity.
An essential aspect to consider is the impact of these changes on the company's financial stability. Improved governance may pave the way for more strategic financial decisions, including potentially re-registering the stock and improving its liquidity profile. In the short term, shareholders might see
From a legal standpoint, the Court-mandated Annual Meeting and the potential replacement of trustees is a significant step towards resolving ongoing issues related to governance failures. The letter highlights severe allegations, including fiduciary breaches, which have critical legal implications. The involvement of the Circuit Court underscores the seriousness of these issues and adds legal weight to the necessity for governance reform.
Replacing trustees can initiate a series of governance reforms that may address these fiduciary breaches. This could include revising bylaws to prevent entrenchment and introducing policies to avoid conflicts of interest. Such legal actions are important for restoring shareholder rights and ensuring that governance aligns with acceptable legal standards. In the long term, these changes can reduce legal risks and liabilities, thereby fostering a more secure investment environment.
Large Shareholder to Nominate Four Independent Trustees to Restore Accountability and Transparency Following Criminal Convictions of Members of Former Management Team
The letter, included below, notifies shareholders of this recent development and of NexPoint's intent to nominate four highly qualified, independent trustees who will act in the interest of shareholders to restore accountability at UDF IV.
NexPoint encourages shareholders to visit udfaccountability.com and complete the contact form to receive ongoing updates about the Company and the upcoming Annual Meeting. Shareholders can also contact NexPoint via email at udfinvestors@nexpoint.com.
Important Update for Shareholders of United Development Funding IV (UDF IV):
Opportunity to Restore Accountability and Transparency at Upcoming Annual Meeting
Dear Fellow Shareholders:
The corporate governance failures at United Development Funding IV ("UDF IV" or the "Company") have left shareholders suffering for years with little hope for recovering value. These failures are highlighted in lawsuits from the Securities and Exchange Commission and Department of Justice, resulting in multimillion-dollar fines, criminal convictions, and prison sentences for several former executives. Sadly, these actions have fallen short in providing adequate resolution for shareholders.
As major shareholders ourselves, NexPoint Real Estate Opportunities, LLC (together with our affiliates "NexPoint") has been working to establish proper oversight and accountability at UDF IV. While management and the Board have resisted our efforts, we are notifying you of a major development that finally gives shareholders a chance to take action to address the corporate governance failures by electing new trustees to the UDF IV Board who will represent your interests and provide a path to recovering value.
- For the first time in over eight years, you have the power to enact positive change at UDF IV. A recent order from the Circuit Court for
Baltimore City, Maryland requires the Company to hold its next Annual Meeting of Shareholders on or before December 31, 2024, during which four of the five trustees must stand for election. While the meeting date has not been announced, we want you to be prepared to exercise your right to vote. We will notify you once the date of the meeting is set. To receive updates via email, complete the contact form at udfaccountability.com or email udfinvestors@nexpoint.com. - NexPoint intends to nominate four highly qualified and independent trustees to replace incumbent trustees Lawrence S. Jones, Philip K.
Marshall , J. HeathMalone , and Steven J. Finkle, who we believe have repeatedly violated their fiduciary duties. The incumbent trustees' actions have continually advanced their own interests and those of UDF IV management at the expense of shareholders. - The incumbent trustees must be replaced. They created an insular governance structure and served as an impediment to liquidity for long-suffering shareholders. In response to basic shareholder requests for accountability, the incumbents changed the Company bylaws, entrenching themselves and disenfranchising shareholders by impeding your voting rights. In fact, three of UDF IV's independent trustees have not stood for election since 2015; one independent trustee has never been elected by shareholders. The incumbents' failure to protect investors' interests has resulted in, among other things, a de-registered, illiquid stock, and their entrenchment tactics have—until now—limited all recourse available to shareholders to enforce basic rights.
- The Board's egregious actions continued even after the Company's executives were convicted and sent to prison for fraud. Under the Board's leadership, the Company's advisor and management carried out a massive multi-year deception and fraud through the UDF IV "investment" program. Worse, once this deception was uncovered, the Board sat idle, allowing the advisor and much of the management team to remain in place, protecting their interests at the expense of shareholders. Of note, the Board also appears to have supported former UDF IV management in improperly using shareholder money to pay legal fees to defend the criminal charges that ultimately sent former management to prison.
- NexPoint's actions have already positively impacted shareholders and resulted in the upcoming, Court-ordered 2024 Annual Meeting. We now need your support to replace the incumbent trustees and put UDF IV on a path to recovering value. Our nominees have decades of relevant professional experience and will seek to restore proper governance and establish a path to liquidity. It is time for UDF IV to have a Board that serves the interests of all shareholders—not just entrenched management. The upcoming Annual Meeting is shareholders' opportunity to reclaim your rightful ownership of the Company following years of corrupt governance and stagnant illiquidity. We hope you will support us in this endeavor.
Sincerely, NexPoint Real Estate Opportunities, LLC
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") intends to deliver 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. The date for the Annual Meeting has not yet been set and NexPoint is not soliciting proxies at this time. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE NEXPOINT PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) WHEN AVAILABLE IN ITS ENTIRETY BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT ANY SOLICITATION. Copies of the documents will be made 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.
CONTACT INFORMATION
For 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
View original content:https://www.prnewswire.com/news-releases/nexpoint-sends-letter-to-united-development-funding-iv-udf-iv-shareholders-in-advance-of-court-ordered-annual-meeting-302171688.html
SOURCE NexPoint Advisors, L.P.
FAQ
What is the significance of the UDF IV Annual Meeting in 2024?
Why is NexPoint nominating new trustees for UDF IV?
What issues have UDF IV shareholders faced in recent years?
How can UDF IV shareholders stay informed about the Annual Meeting?
What outcomes does NexPoint anticipate from the 2024 Annual Meeting?
