180 Degree Capital Corp. Notes the Start of Discount Management Program First Measurement Period

Rhea-AI Summary

180 Degree Capital Corp. (NASDAQ:TURN) has announced the beginning of the first measurement period of its Discount Management Program, aiming to reduce the discount that 180’s common stock trades at versus its net asset value per share. The Program, established to monitor the discount and take actions for the benefit of TURN’s common stockholders, will consider options including a significant expansion of 180’s current stock buyback program, cash distributions, or a tender offer if the stock trades at an average daily discount to NAV of more than 12% during the measurement periods. The company's business transformation is complete with substantially all of 180’s assets in cash and publicly traded securities, and the Program is designed to set the stage for the Board of Directors to take necessary actions to narrow the discount. The existence of the Program and its associated measurement periods demonstrate the continued focus of both 180’s Board and management team on taking active steps to minimize any persistent above average discount in 180’s share price.

Insights

Financial Analyst

The initiation of 180 Degree Capital Corp.'s Discount Management Program represents a strategic effort to align the company's stock price more closely with its net asset value (NAV). This is a critical move, as a persistent discount can imply market skepticism about the company's valuation, asset quality, or management's ability to unlock value. The program's focus on potentially expanding stock buybacks, cash distributions, or a tender offer in response to a sustained discount could serve as a catalyst for share price appreciation. This aligns with the classic financial theory that buybacks can signal management's confidence in the firm's fundamentals and often lead to a re-rating of the stock by the market.

For investors, the key takeaway is that management is taking a proactive stance on capital allocation decisions to address the discount issue. However, it's important to consider the liquidity implications of such actions, especially when it comes to buybacks or cash distributions. The long-term impact on shareholder value will largely depend on the execution and the market's reception of these strategic moves. Investors will need to monitor the effectiveness of this program in narrowing the discount and whether it leads to a more efficient market valuation of 180's stock.

Market Research Analyst

The establishment of measurement periods by 180 Degree Capital Corp. to evaluate the performance of their Discount Management Program is an interesting approach to corporate governance and investor relations. It's indicative of a broader trend where companies are increasingly being held accountable for the market's perception of their value. The program's explicit targets and the possibility of concrete actions if those targets are not met could potentially reassure investors that management is committed to addressing the discount to NAV.

From a market dynamics perspective, the announcement of such a program could influence investor behavior, as it sets clear expectations for future corporate actions. It could also impact the trading volumes and volatility of 180's stock around these measurement periods. Market participants will likely watch closely for any signs of narrowing discounts or the implementation of the program's measures, which could introduce new variables into their trading strategies.

Corporate Governance Expert

The proactive stance of 180 Degree Capital Corp.'s Board in addressing the discount to NAV through the Discount Management Program reflects a strong commitment to shareholder interests. It is a governance decision that underscores the importance of transparency and accountability in corporate actions. The clear communication of the measurement periods and potential responses by the Board also highlights the role of governance structures in financial decision-making.

However, it is essential for the Board to balance the immediate benefits of such programs with the long-term strategic goals of the company. While measures like stock buybacks can provide short-term price support, they must be weighed against the opportunity cost of other potential investments that could drive growth. The effectiveness of such programs in enhancing shareholder value will ultimately be judged by the market's response and the sustainable impact on the company's stock price.

MONTCLAIR, N.J., Jan. 02, 2024 (GLOBE NEWSWIRE) -- 180 Degree Capital Corp. (NASDAQ:TURN) (“180”) noted that today is the beginning of the first measurement period of its previously announced Discount Management Program (the “Program”) established to reduce the discount that 180’s common stock trades at versus its net asset value per share (“NAV”).

As mentioned in 180’s prior press release on November 13, 2023, under the terms of the Program, 180’s Board of Directors have set two measurement periods of January 1, 2024, to December 31, 2024, and January 1, 2025, to June 30, 2025. Should 180’s common stock trade at an average daily discount to NAV¹ of more than 12% during either of these measurement periods, 180’s Board will consider all available options including, but not limited to, a significant expansion of 180’s current stock buyback program of up to $5 million, cash distributions, or a tender offer.

“As I noted in prior releases, now that our business transformation is complete with substantially all of 180’s assets in cash and publicly traded securities, we believe TURN’s common stock should not trade at the same discount it did when we first started and had nearly 80% of our holdings in legacy privately held securities,” said Kevin M. Rendino, Chief Executive Officer of 180. “Our Discount Management Program is designed to monitor this discount and set the stage for our Board of Directors to take actions for the benefit of TURN’s common stockholders should the discount not narrow considerably from where it stands today. We take this discount very seriously, and are committed to taking steps to narrow it.”

“To be clear, any decision regarding actions taken at the end of each measurement period as a result of the Program remains with 180’s Board,” said Daniel B. Wolfe, President of 180. “We believe the existence of the Program and its associated measurement periods demonstrate the continued focus of both 180’s Board and management team on taking active steps to minimize any persistent above average discount in 180’s share price. In the future, 180’s Board may or may not determine to extend the Program beyond June 2025.”

About 180 Degree Capital Corp.

180 Degree Capital Corp. is a publicly traded registered closed-end fund focused on investing in and providing value-added assistance through constructive activism to what we believe are substantially undervalued small, publicly traded companies that have potential for significant turnarounds. Our goal is that the result of our constructive activism leads to a reversal in direction for the share price of these investee companies, i.e., a 180-degree turn. Detailed information about 180 and its holdings can be found on its website at www.180degreecapital.com.

Press Contact:
Daniel B. Wolfe
Robert E. Bigelow
180 Degree Capital Corp.
973-746-4500
ir@180degreecapital.com

Mo Shafroth
Peaks Strategies
mshafroth@peaksstrategies.com

Forward-Looking Statements

This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the Company's current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release. Please see the Company's securities filings filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the Company's business and other significant factors that could affect the Company's actual results. Except as otherwise required by Federal securities laws, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The reference and link to the website www.180degreecapital.com has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release. 180 is not responsible for the contents of third-party websites.

1. Daily estimated NAVs used for the discount calculation outside of quarter-end dates are determined as prescribed in 180’s Valuation Procedures.

FAQ

What is the purpose of 180 Degree Capital Corp.'s Discount Management Program?

The Discount Management Program aims to reduce the discount that 180’s common stock trades at versus its net asset value per share.

What options will be considered if the stock trades at an average daily discount to NAV of more than 12% during the measurement periods?

Options considered include a significant expansion of 180’s current stock buyback program, cash distributions, or a tender offer.

What is the goal of the Program in relation to 180's business transformation?

The Program is designed to monitor the discount and set the stage for the Board of Directors to take necessary actions to narrow the discount, given the completion of 180’s business transformation with substantially all of its assets in cash and publicly traded securities.

Who is the CEO of 180 Degree Capital Corp.?

Kevin M. Rendino is the Chief Executive Officer of 180 Degree Capital Corp.

Who is the President of 180 Degree Capital Corp.?

Daniel B. Wolfe is the President of 180 Degree Capital Corp.