NexPoint Comments on United Development Funding IV (UDF IV) Annual Meeting
NexPoint Real Estate Opportunities announced it will not attend or vote at UDF IV's Annual Meeting on December 10, 2024, citing concerns about the recently announced merger with Ready Capital (NYSE:RC). NexPoint criticizes the timing of the merger announcement, made just eight days before the Annual Meeting, and the lack of proper disclosures for shareholders to evaluate the transaction.
The company calls for the meeting's adjournment until full disclosure is provided, arguing that UDF IV is manipulating shareholders by suggesting that voting for NexPoint's nominees equals voting against the merger. Both Glass Lewis and Egan-Jones proxy advisory firms recommend voting 'FOR' all NexPoint nominees, expressing concerns about the merger's timing and transparency.
NexPoint Real Estate Opportunities ha annunciato che non parteciperà né voterà all'Assemblea Annuale di UDF IV, che si terrà il 10 dicembre 2024, citando preoccupazioni riguardo alla recente fusione annunciata con Ready Capital (NYSE:RC). NexPoint critica il tempismo dell'annuncio della fusione, fatto solo otto giorni prima dell'Assemblea Annuale, e la mancanza di adeguate informazioni per permettere agli azionisti di valutare la transazione.
L'azienda chiede l'annullamento dell'incontro fino a quando non saranno fornite tutte le informazioni necessarie, sostenendo che UDF IV stia manipolando gli azionisti suggerendo che votare per i candidati di NexPoint equivalga a votare contro la fusione. Sia Glass Lewis che Egan-Jones, società di consulenza proxy, raccomandano di votare 'A FAVORE' di tutti i candidati di NexPoint, esprimendo preoccupazioni riguardo al tempismo e alla trasparenza dell'accordo di fusione.
NexPoint Real Estate Opportunities anunció que no asistirá ni votará en la Junta Anual de UDF IV, que se llevará a cabo el 10 de diciembre de 2024, citando preocupaciones sobre la reciente fusión anunciada con Ready Capital (NYSE:RC). NexPoint critica el momento del anuncio de la fusión, realizado apenas ocho días antes de la Junta Anual, y la falta de divulgaciones adecuadas para que los accionistas puedan evaluar la transacción.
La empresa solicita el aplazamiento de la reunión hasta que se proporcione la divulgación completa, argumentando que UDF IV está manipulando a los accionistas al sugerir que votar por los nominados de NexPoint es lo mismo que votar en contra de la fusión. Tanto Glass Lewis como Egan-Jones, firmas de asesoría de proxy, recomiendan votar 'A FAVOR' de todos los nominados de NexPoint, expresando preocupaciones sobre el momento y la transparencia de la fusión.
NexPoint Real Estate Opportunities는 2024년 12월 10일에 열리는 UDF IV의 연례 회의에 참석하거나 투표하지 않겠다고 발표하며, 최근 Ready Capital (NYSE:RC)과의 합병 소식에 대한 우려를 표명했습니다. NexPoint는 연례 회의 불과 8일 전에 발표된 합병 수순의 타이밍과 주주가 거래를 평가하기 위해 필요한 정보가 부족하다고 비판합니다.
회사는 모든 정보가 제공될 때까지 회의를 연기할 것을 요청하며, UDF IV가 NexPoint의 후보자에게 투표하는 것이 합병에 반대하는 것을 의미한다고 제안함으로써 주주를 조종하고 있다고 주장합니다. Glass Lewis와 Egan-Jones 두 개의 의결권 자문 회사는 합병의 타이밍과 투명성에 대한 우려를 표명하며 모든 NexPoint 후보자에게 '찬성' 투표를 권장합니다.
NexPoint Real Estate Opportunities a annoncé qu'il ne participera ni ne votera à l'Assemblée Générale de UDF IV le 10 décembre 2024, invoquant des préoccupations concernant la fusion récemment annoncée avec Ready Capital (NYSE:RC). NexPoint critique le moment de l'annonce de la fusion, faite seulement huit jours avant l'Assemblée Générale, et le manque de divulgations appropriées pour permettre aux actionnaires d'évaluer la transaction.
La société appelle à l'ajournement de la réunion jusqu'à ce que toutes les informations soient fournies, soutenant que UDF IV manipule les actionnaires en suggérant que voter pour les candidats de NexPoint équivaut à voter contre la fusion. Les entreprises de conseil en vote, Glass Lewis et Egan-Jones, recommandent de voter 'POUR' tous les candidats de NexPoint, exprimant des inquiétudes concernant le moment et la transparence de la fusion.
NexPoint Real Estate Opportunities hat angekündigt, dass sie an der Jahreshauptversammlung von UDF IV am 10. Dezember 2024 weder teilnehmen noch abstimmen wird, und zwar aufgrund von Bedenken hinsichtlich der kürzlich angekündigten Fusion mit Ready Capital (NYSE:RC). NexPoint kritisiert das Timing der Fusion, die nur acht Tage vor der Jahreshauptversammlung bekannt gegeben wurde, sowie das Fehlen angemessener Informationen für die Aktionäre zur Bewertung der Transaktion.
Das Unternehmen fordert die Vertagung der Sitzung, bis alle Informationen bereitgestellt sind, und argumentiert, dass UDF IV die Aktionäre manipuliert, indem es suggeriert, dass die Stimmen für die Kandidaten von NexPoint gleichzeitig gegen die Fusion gerichtet sind. Sowohl Glass Lewis als auch Egan-Jones, zwei Proxy-Beratungsgesellschaften, empfehlen, 'FÜR' alle Kandidaten von NexPoint zu stimmen und äußern Bedenken hinsichtlich des Timings und der Transparenz der Fusion.
- Independent proxy advisory firms Glass Lewis and Egan-Jones support NexPoint's nominees
- Strategic move to prevent board entrenchment by forcing all trustees to stand for reelection at the next Annual Meeting
- Lack of transparency regarding the Ready Capital merger details
- Potential manipulation of shareholder votes through timing of merger announcement
- Risk of delayed trustee elections until late 2025
- Inadequate disclosure and time for shareholders to evaluate the merger
Insights
This situation presents significant governance and securities law concerns. The timing of UDF IV's merger announcement, just 8 days before the Annual Meeting, raises serious questions about potential manipulation of shareholder voting. The lack of adequate disclosure regarding the Ready Capital merger could violate securities laws requiring full and fair disclosure of material information to shareholders.
The board's apparent attempt to use the merger announcement to influence the trustee election, combined with threats to hold over current trustees until 2025 without achieving quorum, suggests potential breaches of fiduciary duty. The independent proxy advisors' criticisms of the timing and transparency further validate these governance concerns.
This appears to be a classic entrenchment scenario where incumbent management is using corporate machinery to maintain control, potentially at the expense of shareholder interests. The lack of proper merger disclosures and attempt to link the board election to merger approval could expose the company to significant legal liability.
The strategic maneuvering around this merger announcement raises serious red flags. The timing appears deliberately designed to pressure shareholders, while the lack of critical financial details about the Ready Capital transaction makes proper valuation impossible. This opacity is particularly concerning given UDF IV's history of shareholder value erosion.
Both major proxy advisory firms' recommendations against management highlight the questionable nature of this rushed merger announcement. The board's threat to delay elections until 2025 without quorum suggests they're using the promise of liquidity as leverage, rather than prioritizing shareholder interests.
NexPoint's decision to abstain from the meeting is a tactical move to prevent board entrenchment through staggered elections. However, this governance dispute creates significant uncertainty for investors, as the lack of merger details and potential year-long delay in board elections could further impact shareholder value.
Declines to Appear at Annual Meeting, Calls for Adjournment of Meeting Until UDF IV Provides Proper Disclosure on Recently Announced Merger with Ready Capital
NexPoint remains concerned about the Company's planned acquisition by Ready Capital (NYSE:RC), which UDF IV announced last week in an apparent attempt to influence today's vote at the Annual Meeting. Not only does the timing of the merger announcement – made just eight days before the Annual Meeting – raise questions about the Company's motives, but there are also critical disclosures omitted from the transaction communications, making it impossible for shareholders to properly evaluate the proposed transaction with Ready Capital. The Company continues to incorrectly suggest that by voting for NexPoint's nominees, shareholders are effectively voting against the proposed merger. UDF IV is thus enticing shareholders with the prospect of a potential liquidity event – with severely inadequate disclosures – at the expense of focusing on the election of the board and the establishment of proper governance and accountability. Notably, the Company's own actions have caused years of illiquidity, which the Board is now wielding as a sword to manipulate shareholder voting.
NexPoint commented on the Annual Meeting:
"If UDF IV insists on making this Annual Meeting and board election a referendum on the potential merger with Ready Capital, then NexPoint calls for the Company to adjourn the meeting until full and proper disclosure can be provided.
We believe the Board timed the merger announcement to manipulate the vote with meager disclosure – particularly in light of the Company's false narrative that a vote for NexPoint is a vote against the merger. To be clear, if elected, NexPoint's nominees will evaluate the merger and make a recommendation in the best interests of UDF IV shareholders.
Despite merger discussions existing for months, UDF IV has given shareholders minimal time and inadequate, scant information to evaluate the proposed transaction or the acquiring company and now feel pressured to accept this outcome; in fact, that has become the case, with certain shareholders switching their votes since the merger announcement.
As today's Annual Meeting is unlikely to achieve the required quorum, we urge the Board to postpone the Annual Meeting until more information about the merger is disclosed to, and can be evaluated by, shareholders. UDF IV has communicated to us, however, that if no quorum is reached, they will hold over the current Trustees and delay Trustee elections until the 2025 Annual Meeting.
The current Trustees have entrenched themselves, overseen massive shareholder value erosion, and completely breached shareholder trust for years. Delaying Trustee elections until late 2025 would present just another example of current management continuing to manipulate the corporate machinery to maintain control for their own personal benefit – this is unacceptable. UDF IV shareholders deserve better governance and accountability."
By NexPoint not attending the Annual Meeting and the Company adjourning a year and holding over, we believe we prevent UDF IV from staggering the election of Trustees and force UDF IV to have all trustees to stand for reelection the next Annual Meeting. These actions are necessary because UDF IV shareholders deserve better governance and accountability."
NexPoint's position was reinforced in reports from independent proxy advisory firms Glass Lewis and Egan-
"While the proposed merger may appear to offer liquidity to shareholders, we believe it reflects a reactionary response by the Company…Our concerns include the lack of transparency regarding the due diligence process and the potential shopping of companies during the merger decision."1
"With the first meaningful board referendum in nearly a decade on the near-term docket – in this instance, seemingly only as a result of legal action in
"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. That such an agreement would be executed less than two weeks prior to the Trust's first substantive election of directors in nearly ten years is more alarming still, and, in our view, further stokes concern about the board's true commitment to good governance and shareholder feedback." 2
"…the sitting board – which, in our view, has no credible investor mandate – has floated a late-stage agreement with Ready Capital, seemingly placing a very questionably timed exit opportunity between themselves and the first opportunity for true shareholder accountability in nearly a decade." 2
- Egan-Jones Proxy Services: United Development Funding IV. December 5, 2024.
- Glass, Lewis & Co., LLC.: United Development Funding IV. December 6, 2024.
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") has delivered 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. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE NEXPOINT PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) IN ITS ENTIRETY. Copies of the documents are 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.
NexPoint has neither sought nor obtained consent from any third party to use previously published information in this press release, including any quotes used in this press release.
CONTACT INFORMATION
UDF IV Investor Contacts
Chuck Garske / Jeremy Provost / Theo Caminiti (Okapi Partners):
Email: info@okapipartners.com
Phone: (212) 297-0720
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 Griffith: ir@nexpoint.com
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SOURCE NexPoint Advisors, L.P.
FAQ
Why did NexPoint decline to attend UDF IV's Annual Meeting on December 10, 2024?
What are the main concerns about UDF IV's merger announcement with Ready Capital?
How did proxy advisory firms respond to NexPoint's position on UDF IV?
