Enterprising Investor
5年前
PhenixFIN Corporation Announces September 30, 2021 Financial Results (12/20/21)
NEW YORK, Dec. 20, 2021 (GLOBE NEWSWIRE) -- PhenixFIN Corporation (NASDAQ: PFX) (the “Company”), a publicly traded business development company, today announced its financial results for the fiscal fourth quarter and fiscal year ended September 30, 2021.
Fourth Quarter Highlights
- Total investment income of $4.4 million; net investment income of $1.1 million
- $69.4 million in cash and cash equivalents on September 30, 2021
- Net asset value of $143.7 million, or $57.08 per share as of September 30, 2021 vs. $55.30 per share as of September 30, 2020
- 141,700 shares repurchased for an aggregate purchase price of $5.9 million during the fourth quarter
Launched FlexFIN, LLC, an asset-based lending business engaged in the gem and jewelry industry.
Subsequent Event
On November 15, 2021, PhenixFIN issued $57.5 million in aggregate principal amount of 5.25% unsecured notes due 2028 (NASDAQ: PFXNZ)
David Lorber, Chief Executive Officer of the Company, stated:
“In our first three quarters as being an internally managed BDC we have made appreciable progress on repositioning the portfolio as we continue to be focused on optimizing the long-term value of PhenixFIN.”
Since January 1, 2021 we have monetized 13 positions and deployed capital into 16 new investments.
During the fourth quarter, we launched FlexFIN, LLC, a partnership with Kwiat & Fred Leighton to provide alternative financing to the gem and jewelry industry. The partnership is intended to leverage Kwiat’s rich 115-year history and network within the gem and jewelry industry. We believe this new business affords us the opportunity to generate higher-yielding, risk adjusted returns within the multi-billion-dollar jewelry industry.
In addition, as of September 30, 2021, the Company had a net capital loss carryforward of $490 million. “We are focused on implementing strategies seeking to increase our NAV and optimize the value of our tax attributes,” added Mr. Lorber.
On January 11, 2021, the Company announced that the Board of Directors approved a share repurchase program authorizing up to $15 million in share repurchases. Under the share repurchase program, the Company is authorized to repurchase from time to time its common stock in open market or other transactions, subject to applicable regulatory requirements. Under this program, 206,488 shares were repurchased through September 30, 2021 at a weighted average share price of $39.73/share.
Selected Fourth Quarter 2021 Financial Results
For the quarter ended September 30, 2021, investment income totaled $4.4 million, of which $2.4 million was attributable to portfolio interest and dividend income and $1.9 million was attributable to fee income.
For the quarter ended September 30, 2021, total net expenses were $3.3 million and total net investment income was $1.1 million.
For the quarter ended September 30, 2021, the Company recorded a net realized gain of $4.0 million and net change in unrealized depreciation of $12.1 million.
Portfolio and Investment Activities
As of September 30, 2021, the fair value of the Company’s investment portfolio totaled $151.6 million and consisted of 42 portfolio companies.
As of September 30, 2021, the Company had 9 portfolio company investments on non-accrual status with a fair market value of $13.9 million.
Liquidity and Capital Resources
At September 30, 2021, the Company had $69.4 million in cash and $77.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023.
ABOUT PHENIXFIN CORPORATION
PhenixFIN Corporation is a non-diversified, internally managed closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. We completed our initial public offering and commenced operations on January 20, 2011. The Company has elected, and intends to qualify annually, to be treated, for U.S. federal income tax purposes, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. Effective January 1, 2021, the Company operates under an internalized management structure.
https://www.globenewswire.com/news-release/2021/12/20/2355171/0/en/PhenixFIN-Corporation-Announces-September-30-2021-Financial-Results.html
Enterprising Investor
5年前
PhenixFIN Corporation Prices Public Offering of $50.0 million of 5.25% Notes Due 2028 (11/09/21)
PhenixFIN Corporation (NASDAQ: PFX) (the “Company” or “PhenixFIN”) today announced that it priced a public offering of $50.0 million aggregate principal amount of 5.25% Notes due 2028 (the “Notes”). The Notes will mature on November 1, 2028, and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after November 1, 2023. The Notes will bear interest at a rate of 5.25% per year payable quarterly on February 1, May 1, August 1 and November 1 of each year, beginning February 1, 2022. The Company also granted the underwriters a 30-day option to purchase up to an additional $7.5 million in aggregate principal amount of Notes to cover overallotments, if any. The Company expects to list the Notes on the Nasdaq Global Market under the trading symbol “PFXNZ” within 30 days of issuance.
Oppenheimer & Co. Inc., B. Riley Securities, Inc., BTIG, LLC, Janney Montgomery Scott LLC and Ladenburg Thalmann & Co. Inc. are acting as joint book-running managers for this offering.
The closing of the transaction is subject to customary closing conditions and the Notes are expected to be delivered on or about November 15, 2021.
The Company intends to use the net proceeds from this offering to redeem a portion of the outstanding principal amount of its 6.125% Notes due 2023.
Investors are advised to carefully consider the investment objectives, risks and charges and expenses of the Company before investing. The preliminary prospectus supplement, dated November 8, 2021, and the accompanying prospectus, dated October 19, 2021, which have been filed with the U.S. Securities and Exchange Commission (the “SEC”), contain this and other information about the Company and should be read carefully before investing.
The offering is being conducted as a public offering under the Company’s effective shelf registration filed with the SEC (File No. 333–258913).
To obtain a copy of the preliminary prospectus supplement for this offering and the accompanying prospectus, please contact: Oppenheimer & Co. Inc., Attention: Syndicate Prospectus Department, 85 Broad Street, 23rd Floor, New York, NY 10004 or by email at FixedIncomeProspectus@opco.com.
The information in the preliminary prospectus supplement, the accompanying prospectus and this press release is not complete and may change. This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
ABOUT PHENIXFIN CORPORATION
PhenixFIN is a non-diversified, internally managed closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. We completed our initial public offering and commenced operations on January 20, 2011. Effective January 1, 2021, the Company operates under an internalized management structure.
Enterprising Investor
5年前
PhenixFIN Corporation Announces Third Quarter 2021 Financial Results (8/11/21)
NEW YORK, Aug. 11, 2021 (GLOBE NEWSWIRE) -- PhenixFIN Corporation (NASDAQ: PFX) (the "Company"), a publicly traded business development company, today announced its financial results for the fiscal third quarter of 2021.
Third Quarter 2021 Highlights
- Total investment income of $8.7 million; net investment income of $5.4 million
- $52.9 million in cash on June 30, 2021
- Net asset value of $156.7 million, or $58.49 per share as of June 30, 2021 vs. $55.30 per share as of September 30, 2020
David Lorber, Chief Executive Officer of the Company, stated: “We are pleased with our performance during the first two quarters of being an internally-managed company. We are encouraged by the improvement in NAV and potential opportunities to deploy capital.”
On January 11, 2021, the Company announced that the Board of Directors approved a share repurchase program authorizing up to $15 million in share repurchases. Under the share repurchase program, the Company is authorized to repurchase from time to time its common stock in open market or other transactions, subject to applicable regulatory requirements. Under this program, 44,788 shares were repurchased through June 30, 2021. In aggregate through August 10, 2021 64,788 shares have been repurchased at an average price of $32.74/share.
Third Quarter 2021 Financial Results
For the quarter ended June 30, 2021, investment income totaled $8.7 million, of which $8.6 million was attributable to portfolio interest and dividend income and $0.1 million was attributable to fee income.
For the quarter ended June 30, 2020, investment income totaled $4.3 million, of which $4.1 million was attributable to portfolio interest and dividend income, and $0.2 million to fee income.
For the quarter ended June 30, 2021, total net expenses were $3.3 million and for the quarter ended June 30, 2020, total net expenses were $5.4 million.
For the quarter ended June 30, 2021, the Company recorded a net realized gain of $0.1 million and net unrealized appreciation of $1.5 million. For the quarter ended June 30, 2020, the Company recorded a net realized loss of $(37.9) million and net unrealized appreciation of $46.9 million.
Portfolio and Investment Activities
As of June 30, 2021, the fair value of the Company's investment portfolio totaled $181.6 million and consisted of 42 portfolio companies.
As of June 30, 2021, the Company had 10 portfolio company investments on non-accrual status with a fair market value of $13.6 million.
Liquidity and Capital Resources
At June 30, 2021, the Company had $52.9 million in cash and $77.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023.
ABOUT PHENIXFIN CORPORATION
PhenixFIN Corporation is a non-diversified, internally managed closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. We completed our initial public offering and commenced operations on January 20, 2011. The Company has elected, and intends to qualify annually, to be treated, for U.S. federal income tax purposes, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. Effective January 1, 2021, the Company operates under an internalized management structure.
https://www.globenewswire.com/news-release/2021/08/11/2279258/0/en/PhenixFIN-Corporation-Announces-Third-Quarter-2021-Financial-Results.html
Enterprising Investor
5年前
PhenixFIN Corporation Announces Second Quarter 2021 Financial Results (5/12/21)
NEW YORK, May 12, 2021 (GLOBE NEWSWIRE) -- PhenixFIN Corporation (NASDAQ: PFX) (the "Company"), a publicly traded business development company, today announced its financial results for the fiscal second quarter of 2021.
Second Quarter 2021 Highlights
- Total investment income of $6.5 million; net investment income of $3.7 million
- $59.1 million in cash on March 31, 2021
- Net asset value of $151.2 million, or $55.91 per share as of March 31, 2021 vs. $55.30 per share as of September 30, 2020
The quarter ended March 31, 2021 represented the first quarter of operations under the Company’s new internalized management structure.
David Lorber, Chief Executive Officer of the Company, stated: “We are pleased with the smooth transition to an internally-managed company and with our performance during the quarter. We are generally encouraged by potential opportunities to enhance value within the legacy portfolio and deploy capital, as we look to achieve our investment objective of generating current income and capital appreciation. In addition, we continue to realize efficiencies in operating under our internalized management structure.”
On January 11, 2021, the Company announced that the Board of Directors approved a share repurchase program authorizing up to $15 million in share repurchases. Under the share repurchase program, the Company is authorized to repurchase from time to time its common stock in open market or other transactions, subject to applicable regulatory requirements. Under this program, 19,773 shares were repurchased through March 31, 2021. In aggregate through May 11, 2021 43,988 shares have been repurchased at an average price of $32.52/share.
Second Quarter 2021 Financial Results
For the quarter ended March 31, 2021, investment income totaled $6.4 million, of which $6.1 million was attributable to portfolio interest and dividend income, $0.2 million was attributable to fee income, and $0.1 million was attributable to other income.
For the quarter ended March 31, 2020, investment income totaled $5.3 million, of which $5.2 million was attributable to portfolio interest and dividend income, and $0.1 million to fee income.
For the quarter ended March 31, 2021, total net expenses were $2.8 million and for the quarter ended March 31, 2020, total net expenses were $9.5 million.
For the quarter ended March 31, 2021, the Company recorded a net realized gain of $0.2 million and net unrealized appreciation of $3.9 million. For the quarter ended March 31, 2020, the Company recorded a net realized loss of $(0.1) million and net unrealized depreciation of $(73.6) million.
Portfolio and Investment Activities
As of March 31, 2021, the fair value of the Company's investment portfolio totaled $168.2 million and consisted of 38 portfolio companies.
As of March 31, 2021, the Company had 10 portfolio company investments on non-accrual status with a fair market value of $16.7 million.
Liquidity and Capital Resources
At March 31, 2021, the Company had $59.1 million in cash and $77.3 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023.
ABOUT PHENIXFIN CORPORATION
PhenixFIN Corporation is a non-diversified, internally managed closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. We completed our initial public offering and commenced operations on January 20, 2011. The Company has elected, and intends to qualify annually, to be treated, for U.S. federal income tax purposes, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. Effective January 1, 2021, the Company operates under an internalized management structure.
https://www.globenewswire.com/news-release/2021/05/13/2228818/0/en/PhenixFIN-Corporation-Announces-Second-Quarter-2021-Financial-Results.html
Enterprising Investor
5年前
PhenixFIN Corporation Adopts 10b5-1 Purchase Plan (3/16/21)
NEW YORK, March 16, 2021 (GLOBE NEWSWIRE) -- PhenixFIN Corporation (NASDAQ: PFX) (“PhenixFIN” or the “Company”) announced today that it has entered into a 10b5-1 Purchase Plan that qualifies for the safe harbors provided by Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the “Plan”). Pursuant to the Plan, an independent broker will make purchases of shares of the common stock (the “Shares”) of the Company, an internally managed business development company, on the open market on behalf of the Company in accordance with purchase guidelines specified in the Plan.
The Plan is designed to allow the Company to repurchase its common stock at times when it otherwise might be prevented from doing so under insider trading laws. Under the Plan, pursuant to the Plan guidelines, the agent will increase the volume of purchases made as the price of the Company’s common stock declines, subject to volume limitations. The timing and amount of any stock repurchases depend on the terms and conditions of the Plan, the market price of the common stock, trading volumes and market conditions. There can be no assurance that any amount of common stock will be repurchased. The Company may, in compliance with applicable law, modify or terminate the Plan at any time.
Unless otherwise terminated, the Plan will be in effect through May 14, 2022, subject to certain conditions.
About PhenixFIN Corporation
PhenixFIN is a Business Development Company traded on the NASDAQ Global Market that provides long-term debt and equity capital to fund growth, acquisitions and recapitalizations of companies in a variety of industries. For additional information about PhenixFIN, please visit PhenixFIN’s website at www.phenixfc.com.
For PhenixFIN investor relations, please call 212-859-0390. For media inquiries, please contact info@phenixfc.com.
https://www.globenewswire.com/news-release/2021/03/16/2194113/0/en/PhenixFIN-Corporation-Adopts-10b5-1-Purchase-Plan.html
Enterprising Investor
5年前
PhenixFIN Corporation Announces Share Repurchase Program (1/11/21)
Also Announces Expanded Management Team and New Website
NEW YORK, Jan. 11, 2021 (GLOBE NEWSWIRE) -- PhenixFIN Corporation (NASDAQ: PFX), a publicly traded business development company, today announced that its board of directors has approved a share repurchase program authorizing up to $15 million in share repurchases.
Under the share repurchase program, the Company is authorized to repurchase from time to time its common stock in open market or other transactions, subject to applicable regulatory requirements. The timing and number of shares to be repurchased will be determined by the Company, based on its evaluation of market and business conditions, share price, and other factors. The share repurchase program does not obligate the Company to repurchase any specific number of common shares, and may be discontinued at any time.
"This important decision reflects management’s focus on increasing shareholder value," said David Lorber, Chairman and Chief Executive Officer of PhenixFIN. "Given the Company’s current liquidity position and the current discount at which the shares trade, we feel approving a share buy-back program expands opportunities available to drive NAV accretion."
The Company also announced that its senior management team is in place along with David Lorber (Chairman and Chief Executive Officer) and Ellida McMillan (Chief Financial Officer). Jeff Dombcik has been hired as a Senior Portfolio Strategist and Therese Dyman as Controller. Mr. Dombcik was most recently with Benefit Street Partners and Ms. Dyman was most recently with Alcentra Capital Corporation.
Additionally, the Company announced the operation of a new website, www.phenixfc.com, to reflect the new name of the Company. The Company’s amended code of ethics and charters have been posted to the website. Shareholders are referred to this website for any future amendments to or waivers of these documents.
This press release is for informational purposes only and is not an offer to purchase or a solicitation of an offer to sell shares of the Company’s common stock.
There is no assurance that the market price of the Company’s shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that the program will enhance shareholder value over the long-term.
ABOUT PHENIXFIN CORPORATION
PhenixFIN (formerly known as Medley Capital Corporation) is a Business Development Company traded on the NASDAQ Global Market that provides long-term debt and equity capital to fund growth, acquisitions and recapitalizations of companies in a variety of industries. For additional information about PhenixFIN, please visit PhenixFIN’s website at WWW.PHENIXFC.COM.
For PhenixFIN investor relations, please call 212-859-0390. For media inquiries, please contact info@phenixfc.com.
http://www.globenewswire.com/news-release/2021/01/11/2156265/0/en/PhenixFIN-Corporation-Announces-Share-Repurchase-Program.html
Enterprising Investor
5年前
Medley Capital Corporation Board Approves Internalization (11/20/20)
New Internalized Management Team to be Installed Effective January 1, 2021
NEW YORK, NY (November 20, 2020) - On November 18, 2020, the Board of Directors (the “Board”) of Medley Capital Corporation (NYSE: MCC) (the “Company”) approved adoption of an internalized management structure effective January 1, 2021. The new management structure will replace the current Investment Management and Administration Agreements with MCC Advisors LLC, which expire on December 31, 2020.
To lead the internalized management team, the Board approved the appointment of David Lorber, who has served as an independent director of the Company since April 2019, as interim Chief Executive Officer and Ellida McMillan as Chief Financial Officer of the Company, each effective January 1, 2021.
Mr. Lorber and Ms. McMillan are in the process of assembling the internalized management team, that will be responsible for the day-to-day management and operations of the Company, under the oversight of the Board. The Company has thus far engaged a senior investment professional with significant credit experience to serve as the lead portfolio strategist, who will work closely with Mr. Lorber. The Company has also retained US Bancorp Fund Services, LLC to serve as the Company’s fund accountant and administrator, and is in the process retaining Alaric Compliance Services, LLC, an officer of which would serve as the Company’s Chief Compliance Officer. The new, simplified and streamlined structure is expected to lead to reduced operating costs/expenses for the Company in 2021, although there can be no assurance of the anticipated savings.
Mr. Lorber, is a Co-Founder of FrontFour Capital Group LLC, an investment adviser, and has served as a Portfolio Manager for the firm since January 2007. Mr. Lorber has significant principal investment expertise in both the equity and credit markets. Mr. Lorber has also served as a director of Ferro Corporation, a leading producer of specialty materials and chemicals for manufacturers, since May 2013, where he is also Lead Director, Chairman of its Governance & Nomination Committee and a member of its Compensation Committee. From April 2006 until December 2014, Mr. Lorber served as a director of Aerojet Rocketdyne Holdings, Inc. (formerly GenCorp Inc.), a technology-based manufacturer of aerospace and defense products and systems with a real estate segment.
Ms. McMillan, served as Chief Financial Officer and Chief Operating Officer of Alcentra Capital Corporation, a NASDAQ-traded BDC, from April 2017 until it merged into Crescent Capital BDC, Inc. in February 2020. Previously, beginning in November 2013, she served as Chief Accounting Officer of Alcentra Capital, Treasurer and Secretary of Alcentra Capital. At Alcentra she built the company’s financial and operating infrastructure, oversaw the IPO and initial NASDAQ listing, as well as assisted in all corporate M&A and strategic processes involving the BDC.
Mr. Lorber said: “I am excited to lead the Company in this new phase as we move forward and look to generate value creatively and efficiently.”
Arthur Ainsberg, the Company’s Lead Independent Director added: “We believe our streamlined internalized structure will increase our flexibility to continue to seek to maximize shareholder value.”
About Medley Capital Corporation
Medley Capital Corporation is a closed-end, externally managed business development company ("BDC") that has common stock which trades on the New York Stock Exchange (NYSE: MCC) and has outstanding bonds which trade on the New York Stock Exchange under the symbols (NYSE: MCV) and (NYSE: MCX). Medley Capital Corporation's investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies expand their businesses, refinance and make acquisitions. Our portfolio generally consists of senior secured first lien loans and senior secured second lien loans. Medley Capital Corporation is presently externally managed by MCC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended. For additional information, please visit Medley Capital Corporation at www.medleycapitalcorp.com.
Enterprising Investor
6年前
Medley Capital Corporation Subject to Monthly Expense Support, Houlihan Lokey Commenced Strategic Review Process (6/15/20)
NEW YORK, June 15, 2020 (GLOBE NEWSWIRE) -- Medley Capital Corporation (NYSE: MCC) (TASE: MCC) (the “Company”) announced today that, on June 12, 2020, the board of directors of the Company (the “Board”), including its special committee (the “Special Committee”), has approved an expense support agreement (the “Expense Support Agreement”) under which MCC Advisors LLC and Medley LLC agreed (jointly and severally) to cap the management fee and all of the Company’s other operating expenses (except interest expenses, certain extraordinary strategic transaction expenses, and other expenses approved by the Special Committee at $667,000 per month (the “Cap”). The Cap is expected to result in a material reduction in the Company’s expenses. Under the Expense Support Agreement, the Cap will be in effect from June 1, 2020 through September 30, 2020. In connection with the Expense Support Agreement, the Board, including all of its independent directors extended the term of the investment management agreement and the administration agreement with MCC Advisors LLC through the quarter ended September 30, 2020.
In addition, the Special Committee continues to explore strategic alternatives seeking to maximize shareholder value. Houlihan Lokey, the Special Committee’s financial advisor, has commenced a strategic review process, which is ongoing. "The Expense Support Agreement is a near-term valuable step in making the Company more efficient through lowering its cost structure," said David Lorber, Chair of the Special Committee.
ABOUT MEDLEY CAPITAL CORPORATION
Medley Capital Corporation is a closed-end, externally managed business development company (“BDC”) that has common stock which trades on the New York Stock Exchange (NYSE: MCC) and the Tel Aviv Stock Exchange (TASE: MCC) and has outstanding bonds which trade on the New York Stock Exchange under the symbols (NYSE: MCV) and (NYSE: MCX). Medley Capital Corporation's investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies expand their businesses, refinance and make acquisitions. Our portfolio generally consists of senior secured first lien loans and senior secured second lien loans. Medley Capital Corporation is externally managed by MCC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended. For additional information, please visit Medley Capital Corporation at www.medleycapitalcorp.com.
ABOUT MCC ADVISORS LLC
MCC Advisors LLC is a subsidiary of Medley Management Inc. (NYSE: MDLY, “Medley”). Medley is an alternative asset management firm offering yield solutions to retail and institutional investors. Medley’s national direct origination franchise is a premier provider of capital to the middle market in the U.S. Medley has $3.8 billion of assets under management in two BDCs, Medley Capital Corporation (NYSE: MCC) (TASE: MCC) and Sierra Income Corporation, and several private investment vehicles. Over the past 18 years, we have provided capital to over 400 companies across 35 industries in North America.1 For additional information, please visit Medley Management Inc. at www.mdly.com.
Medley LLC, the operating company of Medley Management Inc., has outstanding bonds which trade on the New York Stock Exchange under the symbols (NYSE:MDLX) and (NYSE:MDLQ).
http://www.globenewswire.com/news-release/2020/06/15/2047974/0/en/Medley-Capital-Corporation-Subject-to-Monthly-Expense-Support-Houlihan-Lokey-Commenced-Strategic-Review-Process.html
Enterprising Investor
7年前
NexPoint Responds to Preliminary Results of Medley Capital Corporation Annual Meeting Vote, Prepares to Participate in Upcoming "Go-shop" Process (6/05/19)
Proxy Contest Sheds Light on Widespread Support for Change at MCC
DALLAS, June 5, 2019 /PRNewswire/ -- NexPoint Advisors, L.P. ("NexPoint"), a stockholder of Medley Capital Corporation ("MCC" or the "Company") (NYSE: MCC), responded to the preliminary results of the Company's annual meeting of stockholders (the "Annual Meeting"), which concluded yesterday. The preliminary vote count from the Annual Meeting apparently indicates that stockholders voted to re-elect incumbent directors Seth Taube and Arthur Ainsberg to the MCC board, despite the Delaware Court opinion and contrary to the recommendations of ISS and Glass Lewis.
However, MCC stakeholders should be aware that Medley Management itself dictated these preliminary results—had affiliate Medley Seed Funding shares echo voted, as they have committed to the Securities and Exchange Commission that they will do with respect to the merger, then NexPoint's nominees would prevail.
The only significant non-insider support for MCC's nominees was from a single individual adviser and a Medley joint venture partner. Other than these groups, which were apparently willing to discount the Delaware opinion and proxy advisory firm recommendations, the support NexPoint received from the shareholders was resounding and included some of the most recognized names in the industry.
Absent these groups and insiders, we understand that the incumbents received minimal support, representing less than 5% of outstanding shares.
"Regardless of the ultimate outcome of the election, we believe we have been overwhelmingly successful in our objective of bringing these important issues to light and championing the fiduciary interests of stockholders," said Thomas Surgent, a partner and legal and compliance officer at NexPoint. "We believe we have energized not only the shareholder base, but also the BDC industry as a whole."
NexPoint hopes that those developments help ensure the MCC board conducts a fair "go-shop" process, and looks forward to participating fully.
That said, the concerns that NexPoint previously raised regarding the pitfalls of the go-shop process remain, as none of the structural issues—including the potential for deadlock on the special committee and the narrow definition of "superior proposal" under the merger agreement—have yet to be addressed. Finally, NexPoint hopes that the board has taken note of the fact that, especially after removing Medley management's vote, this vote reflects that there is nowhere near the stockholder support needed to approve the mergers.
About NexPoint Advisors, L.P.
NexPoint Advisors, L.P. (together with its affiliates "NexPoint") is an SEC-registered investment adviser to a suite of alternative investment vehicles, including a closed-end fund, a business development company, and an interval fund, among others. An affiliate of Highland Capital Management, L.P., NexPoint is part of a multibillion-dollar investment platform that serves both retail and institutional investors worldwide. NexPoint's investment capabilities include high-yield credit, real estate, public equities, private equity and special situations, structured credit, and sector- and region-specific verticals built around specialized teams. For more information visit www.nexpointfunds.com.
https://www.prnewswire.com/news-releases/nexpoint-responds-to-preliminary-results-of-medley-capital-corporation-annual-meeting-vote-prepares-to-participate-in-upcoming-go-shop-process-300862837.html
Enterprising Investor
7年前
Preliminary Results Indicate Medley Capital Corporation’s Shareholders Re-Elect Arthur Ainsberg and Seth Taube To Board of Directors with Significant Shareholder Support (6/05/19)
Final Results To Be Released After Tabulation and Certification
NEW YORK, June 04, 2019 (GLOBE NEWSWIRE) -- Medley Capital Corporation (NYSE: MCC, “MCC” or the “Company”) (TASE: MCC) today announced that, according to the preliminary vote count provided by Alliance Advisors, MCC’s proxy solicitor, MCC’s shareholders voted to re-elect Arthur Ainsberg and Seth Taube to its Board of Directors at the Company’s 2019 Annual Meeting of Shareholders.
Brook Taube, Chairman and CEO of MCC, said “We are grateful for the significant level of support our shareholders have given to Arthur and Seth.”
The preliminary vote count also indicates that shareholders voted for the ratification of the appointment of Ernst & Young LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019.
The Company is awaiting the report of the independent inspector of elections before releasing any further statements about the vote. The inspector has indicated that it expects to issue a preliminary tabulation of the vote results within the next several business days, following which the Company expects to file a Current Report on Form 8-K with the Securities and Exchange Commission reporting the inspector’s preliminary results and, when available, will file a Current Report on Form 8-K with the inspector’s final voting results.
ABOUT MEDLEY CAPITAL CORPORATION
Medley Capital Corporation is a closed-end, externally managed business development company ("BDC") that trades on the New York Stock Exchange (NYSE: MCC) and the Tel Aviv Stock Exchange (TASE:MCC). Medley Capital Corporation's investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies expand their businesses, refinance and make acquisitions. Medley Capital Corporation's portfolio generally consists of senior secured first lien loans and senior secured second lien loans. Medley Capital Corporation is externally managed by MCC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended. For additional information, please visit Medley Capital Corporation at www.medleycapitalcorp.com.
ABOUT MCC ADVISORS LLC
MCC Advisors LLC is a subsidiary of Medley Management Inc. (NYSE: MDLY, “Medley”). Medley is an alternative asset management firm offering yield solutions to retail and institutional investors. Medley’s national direct origination franchise is a premier provider of capital to the middle market in the U.S. Medley has $4.7 billion of assets under management in two business development companies, Medley Capital Corporation (NYSE: MCC) (TASE: MCC) and Sierra Income Corporation, a credit interval fund, Sierra Total Return Fund (NASDAQ:SRNTX) and several private investment vehicles. Over the past 17 years, we have provided capital to over 400 companies across 35 industries in North America.1 For additional information, please visit Medley Management Inc. at www.mdly.com.
Medley LLC, the operating company of Medley Management Inc., has outstanding bonds which trade on the New York Stock Exchange under the symbols (NYSE:MDLX) and (NYSE:MDLQ). Medley Capital Corporation is dual-listed on the New York Stock Exchange (NYSE:MCC) and the Tel Aviv Stock Exchange (TASE: MCC) and has outstanding bonds which trade on both the New York Stock Exchange under the symbols (NYSE:MCV), (NYSE:MCX) and the Tel Aviv Stock Exchange under the symbol (TASE: MCC.B1).
http://www.globenewswire.com/news-release/2019/06/05/1864365/0/en/Preliminary-Results-Indicate-Medley-Capital-Corporation-s-Shareholders-Re-Elect-Arthur-Ainsberg-and-Seth-Taube-To-Board-of-Directors-with-Significant-Shareholder-Support.html
Enterprising Investor
7年前
Dismal Performance and a Legal Rebuke Isn’t Stopping This Credit Fund (5/30/19)
Julie Segal
“How do I say this nicely? It’s a manager that basically should not exist,” according to Cliffwater’s CEO.
Even though two directors of a money losing business development company called Medley Capital Corp. were found to be in violation of their fiduciary duty by a Delaware Court in March, they’re still up for reelection on June 4.
It’s just the latest move in an almost year-long battle in the world of BDCs — investment vehicles for private loans that are similar in structure to real estate investment trusts (REITs). The fight could take a decisive turn at the annual meeting when shareholders vote on the reelection of a special committee that includes the two men: Seth Taube and Arthur Ainsberg.
Earlier this month, proxy advisors Institutional Shareholders Services and Glass Lewis issued reports recommending that shareholders vote against the two incumbents and instead vote for two independent directors nominated by NexPoint Advisors, an affiliate of asset manager Highland Capital. In January, NexPoint made a proposal to the board to take over as adviser to Medley Capital Corp. (MCC), which is among the worst performing BDCs. The total shareholder return was -37.7 percent between January 19, 2011, when MCC went public, and May 17, 2019, according to ISS. MCC’s track record puts the BDC 65.1 percentage points below the index and 96.2 percentage points below its median peer.
A spokesman for Medley declined to comment.
Institutional investors’ interest in BDCs has increased in recent years, but the Medley saga comes as a reminder of the sector’s wild-west reputation. While BDCs are registered with the Securities and Exchange Commission, they have some less than shareholder-friendly attributes. For one, activist investors are largely absent from the space. Hedge funds, mutual funds, and other investment firms can’t own more than 3 percent of a BDC. This means they cannot build up a meaningful stake and pressure management for change, as they frequently do in other public markets. The SEC has two BDC shareholder proposals out for public comment, including one that would raise the amount that hedge funds and other investment shops can own of a BDC.
The Medley saga dates back to August 2018 when adviser Medley Management proposed a three-way merger. First, two of its affiliated BDCs — private Sierra Income Corp. and MCC — would merge. Then affiliated Medley Management, the advisor, would become a subsidiary of the combined BDC.
But the deal was riddled with conflicts, experts say.
The three organizations are essentially run by the same people. Brook Taube, chairman and CEO of MCC, is also co-CEO and co-chairman with his brother Seth Taube, of Medley Management. Brook and Seth Taube along with a younger brother own the majority of Medley Management. Brook Taube is a director of Sierra Income. Seth Taube, who is up for reelection as an MCC director in the June 4 election, is board chairman and CEO of Sierra Income. The August 2018 merger proposal required an exemption from the SEC to allow the BDC’s advisor to become a subsidiary of the BDC itself, an unusual arrangement. The deal also included a $75 million cash payment from the new combined BDC to Medley Management as well as a new advisory contract for Medley Management, despite MCC’s poor performance.
In court documents, one of the BDC’s largest shareholders — FrontFour Capital — said the transaction represented a 100 percent premium for Medley Management.
“It’s true that big investors need to see crap like this wiped out” said one executive at a large private equity firm with a BDC. “Medley is large enough that it can’t be ignored. It would be good news for retail investors, who now dominate BDCs, if institutions started playing a bigger role and then demanded higher standards.”
Steve Nesbitt, CEO of alternatives advisory firm Cliffwater, told Institutional Investor, “Medley is a definite fourth quartile performer. How do I say this nicely? It’s a manager that basically should not exist.”
In January, NexPoint put an alternative to Medley on the table to manage the BDC, which included lower management and incentive fees that NexPoint claims will lower expenses by $5.7 million annually. The deal also included a lump sum payment to MCC and an agreement to buy back shares in an attempt to narrow the discount at which MCC is trading. But the board’s special committee charged with negotiating the Medley merger never responded, according to public documents. NexPoint then submitted a sweetened second proposal. In both offers, NexPoint said it would be willing to negotiate further.
By the end of February, FrontFour filed a lawsuit over Medley Management’s alleged breach of its fiduciary duty and other matters.
On March 11, a Delaware court found that the MCC board violated its fiduciary duties in approving the Medley mergers. Board members cited in the court’s opinion included Brook Taube and Seth Taube, “whose financial interests lie with Medley Management over MCC,” according to the opinion. But only two board members resigned.
The opinion was a flaming reprimand of the board, according to several people familiar with the decision and the court’s thinking, as well as a straightforward reading of the text.
“In the end, the Special Committee allowed Medley Management to extract a huge premium while Medley Capital stockholders received none,” according to the documents. The court said the board’s supposedly arm’s length relationship with MCC, Sierra, and Medley Management was only believable “at a distance.” As the court wrote, “In reality, when the Taube brothers proposed the transactions in June 2018, Medley Management was facing enormous financial pressure. Medley Management had engaged in two sales processes in 2017, both of which failed, which left merging with affiliates as Medley Management’s only solution.”
What came out in the discovery process was that the Taube brothers tried to sell Medley Management in 2017 and got agreements from approximately 30 potential bidders. The process prevented the bidders from a broad array of activities, including advisory deals with MCC (or the two BDCs). That meant few competitors would be in a position to challenge Medley Management’s contract with MCC, even though investors were suffering from its poor performance.
After the decision, FrontFour reached a settlement with MCC that included two board appointments to replace two resigning directors named in the Delaware court opinion. One of FrontFour’s directors will lead the special committee. That still left five of the seven directors in place.
After what NexPoint considered failed negotiations with MCC’s board, NexPoint decided the only way that third-party proposals, including its own, would get a fair review was to improve governance and nominate two independent directors to replace two directors up for reelection, according to a presentation to MCC stockholders by NexPoint.
“We believe the misalignment of interests and influence of entrenched insiders — not to mention the fact that the Delaware Chancery Court found that five of the existing directors violated their fiduciary duties — prevents the current MCC board from properly evaluating any proposal that challenges the Taubes and Medley Management,” wrote Thomas Surgent, partner and chief compliance officer at Highland/NexPoint, in an email.
“Even though we are seeking to become the company’s external manager, our interests are completely aligned with stockholders, because our goal in this election is simply to ensure that there is an even playing field for all participants in the go-shop process. We didn’t nominate NexPoint affiliates; in fact, we have absolutely no prior relationship with our nominees.”
According to a May investor presentation from MCC, the company says the addition of NexPoint nominees is not warranted because two investor nominees from FrontFour were recently appointed. In addition, according to the investor presentation, NexPoint’s nominees are conflicted because the manager wants to also become MCC’s outside advisor. In the presentation, MCC also claims NexPoint has a “concerning record,” and lists a number of articles and regulatory actions, including an investor lawsuit stemming from a Highland hedge fund that was shuttered during the financial crisis.
ISS, the proxy advisor, pointed out in its recommendation to vote against the incumbent directors a number of concerns for stockholders in MCC, including the status of notes issued by the BDC. “There are multiple worrying trends in the company’s operating performance, but the most troubling is the decline in the value of net assets... [NexPoint] pointed out that MCC’s 2024 notes have a financial covenant requiring a minimum net asset level of $275 million or more. As of the end of the first quarter, MCC's balance sheet has $278 million in net assets. If the net asset value is below that threshold for two consecutive quarters the notes could be accelerated, creating substantial distress for the company.”
In its full report, ISS also stated that “further change at the board level is warranted” as a result of “inferior shareholder returns during the incumbents’ tenure;” “troubling operating performance;” and “the Delaware memorandum opinion that found the company’s nominees breached their fiduciary duties.”
In Glass Lewis’s report, the proxy advisory called out the directors specifically. The proxy adviser said, “Arthur Ainsberg has failed to represent the best interests of MCC shareholders.” It noted his “fail[ure] to understand that the prior sale process for MDLY [Medley Management] did not ‘effectively’ shop MCC.” Glass Lewis described that failure as “an egregious error for the chairman of a special committee tasked with seeking the best alternative for shareholders.”
Cliffwater’s Nesbitt said the battle comes down to corporate governance.
“It’s like any public company. Without activists — if you can’t get control of the board — you’re looking at a slow death. The 3 percent rule allows this to exist,” said Nesbitt. “The good news is things are changing. Big shareholder-friendly shops like Benefit Street Partners, Oaktree, and Crescent are entering this space with reasonable fees — even if not the cheapest — and good boards.”
https://www.institutionalinvestor.com/article/b1fmtdqxcbr72m/Dismal-Performance-and-a-Legal-Rebuke-Isn-t-Stopping-This-Credit-Fund
Enterprising Investor
7年前
Proxy Advisory Firms Weigh in on Medley/NexPoint Battle (5/28/19)
Institutional Shareholder Services (ISS) and Glass Lewis, two independent proxy advisory firms, both issued reports recommending that stockholders of Medley Capital Corporation (NYSE: MCC) vote for NexPoint Advisor’s independent director nominees at the June 4, 2019 annual meeting of stockholders.
Institutional Shareholder Services (ISS) and Glass Lewis, two independent proxy advisory firms, both issued reports recommending that stockholders of Medley Capital Corporation (NYSE: MCC) vote for NexPoint Advisor’s independent director nominees at the June 4, 2019 annual meeting of stockholders.
NexPoint has been a thorn in Medley’s side since submitting a competing management proposal back in January and publicly criticizing its planned merger with affiliates Sierra Income Corporation, a non-traded BDC, and Medley Management (NYSE: MDLY), which controls both Sierra and Medley Capital.
In their proxy analyses, both ISS and Glass Lewis both support the removal of the two incumbent directors, Seth Taube and Arthur Ainsberg, who are up for re-election. NexPoint has nominated Stephen A. Mongillo and Mark T. Goglia as independent directors of Medley Capital, a publicly traded business development company.
ISS concluded that “further change at the board level is warranted” as a result of “inferior shareholder returns during the incumbents’ tenure,” “troubling operating performance,” and “the Delaware memorandum opinion that found the company’s nominees breached their fiduciary duties.”
ISS noted that NexPoint “has presented a compelling case that…its nominees are the best option available to achieve that change.” The proxy firm also expressed concerns about the MCC director nominees, including their “conflicted and underperforming investment management,” as well as their role in “oversee[ing] negative total shareholder returns.”
In its report, Glass Lewis concluded that “NexPoint has made a compelling argument in favor of removing and replacing the directors up for election at the 2019 annual meeting.”
Glass Lewis calls the conduct of the MCC directors “appalling,” and said that the “Delaware decision provides sufficient evidence that the corporate governance at MCC is fundamentally broken and speaks to a clear need to overhaul the board.”
As part of the merger proposal, Sierra seeks to merge with Medley Capital, and then merge with Medley Management, with Sierra being the surviving company that is structured as a publicly-traded BDC.
Proxy advisory firms Glass Lewis & Co. and Institutional Shareholder Services, as well as Front Four Capital Group LLC, a significant Medley Capital shareholder, criticized Medley’s handling of NexPoint’s offer, which was rejected by the company, and the proxy advisory firms urged shareholders to vote against the merger.
FrontFour later filed a class action lawsuit against Medley and its board in the Delaware Chancery Court, alleging breach of fiduciary duties to stockholders in connection with the merger. Medley Management and Sierra were also named in the lawsuit for allegedly aiding and abetting the breaches.
The court ruled that Medley Capital’s directors breached their fiduciary duties in entering into the proposed merger and halted the vote until investors were provided with corrective disclosures on the deal.
Medley Capital and FrontFour later agreed to certain settlement terms in connection with the court’s decision that included amending the proposed merger agreements to include a “go shop” process to solicit superior transactions.
Additionally, if the merger is consummated, a settlement fund will be created, consisting of $17 million of cash and $30 million of Sierra common stock, and distributed to eligible members of a class of MCC stockholders.
Following the resignations of John Mack and Mark Lerdal, FrontFour co-founder David Lorber and Lowell Robinson, the former CFO and COO of online advertising network MIVA Inc., were appointed to Medley Capital’s board and independent special committee, with Lorber being appointed as the chair of the special committee.
The three companies have postponed their respective special meetings of stockholders on the proposed merger and anticipate holding the meetings no later than the third quarter of 2019.
NexPoint Advisors L.P. is an SEC-registered investment adviser to a suite of alternative investment vehicles, including a closed-end fund, a business development company, and an interval fund, among others.
An affiliate of Highland Capital Management, NexPoint is part of an investment platform that serves both retail and institutional investors. NexPoint’s investment capabilities include high-yield credit, real estate, public equities, private equity and special situations, structured credit, and sector- and region-specific verticals build around specialized teams.
https://thediwire.com/proxy-advisory-firms-weigh-medley-nexpoint-battle/
Enterprising Investor
7年前
Hostile Takeover Tactics Come to the World of Small Private Lending (5/24/19)
By Lisa Lee
Taube brothers sought to merge two lenders with another firm
Shareholder Highland objects as BDC activisms heats up
Bare-knuckle tactics used in hostile takeovers seldom make it to the world of private lending to small American firms. Until now.
Highland Capital Management is seeking to oust two directors at Medley Capital Corp., a business development company it holds a small stake in. MCC is controlled by the Taube twins, Seth and Brook, who are trying to merge it with their other companies amid a stark decline in its performance. Highland says the plan is highly flawed.
Highland’s more aggressive steps -- which include a proposal to run MCC -- may prompt better governance and improve shareholder rights in the BDC industry, where significant growth has drawn concerns about excessive risk taking. Business development companies now manage more than $90 billion. They’ve been able to proliferate because they can generate high income for their mom-and-pop investors by lending money to smaller businesses.
"There has been an uptick in shareholder activism in the BDC space in the last three to four years," said John Mahon, a partner at Schulte Roth & Zabel LLP. “Highland’s proxy move is a new step in activism in its aggressiveness. If Highland succeeds, that could bring more activism to the BDC world.”
Highland’s battle, undertaken through its NexPoint Advisors LP affiliate, follows efforts by FrontFour Capital Group, a larger shareholder in MCC. Connecticut-based FrontFour in December objected to the Taubes’ proposal to combine MCC with companies they also control, Sierra Income Corp. and Medley Management Inc. which it had outlined in August.
FrontFour’s arguments have included that the merger transfers $120 million away from shareholders, based on MCC’s stock price drop after the deal’s announcement. FrontFour took the matter to the Delaware Chancery Court, which agreed with FrontFour’s claim that the MCC directors, including the Taube brothers, breached their fiduciary duty in approving the merger. The court noted the BDC’s 85% plunge in net investment income since 2014.
"In this case, the timing, structure, initiation and negotiation of the Proposed Transaction were conceived for the purpose of -- and did -- advance the Taubes’ interest at the expense of the Medley Capital’s other stockholders," the court said in its decision.
Settlement Reached
MCC and FrontFour reached a settlement in April whereby MCC agreed to amend its transactions to include a go-shop process. That means it has to solicit superior proposals to the merger. Under the settlement accord, two FrontFour employees were appointed to the board to replace John E Mack and Mark Lerdal, who had resigned -- after getting a scathing assessment of their behavior by the court. (Mack is not to be confused with the former Morgan Stanley Chairman and Chief Executive Officer John J Mack.)
In response to a Bloomberg News request for comment, Lerdal disputed the court’s depiction of his performance. “I believe I was independent in all regards,” he said.
Highland now aims to take it further. It wants to appoint two directors to the board, resulting in the ouster of Seth Taube and Arthur Ainsberg, and the appointment of Stephen Mongillo and Mark Goglia. It argues that the continued presence of five of the original board members jeopardizes shareholder interests, by risking deadlock. It also makes the acceptance of alternative proposals unlikely, Highland said in a May presentation.
Institutional Shareholder Services and Glass Lewis, two shareholder advisory firms, recommended that investors vote for Highland’s directors, according to a statement from NexPoint on Friday. The Dallas-based money manager isn’t seeking to take over the BDC but wants to manage the vehicle --a role that can earn lucrative fees.
Interest in alternative transactions had already emerged, including from ZAIS Group Holdings, Origami Capital Partners and Marathon Asset Management. Those were considered but ultimately not engaged with, according to the court’s verdict in March. In fact, in one text to Brook Taube’s cellphone, MCC director Lerdal asked if they had to respond to “every f*cksake on the planet.”
Acquiescent Group
BDC shareholders tend to be an acquiescent group mainly of retail investors. While many of the small-business lenders are publicly-traded, regulations capping ownership to 3% made it harder for holders to galvanize for change. Efforts are underway to change that, however, and the SEC sought comments on amending the rule later last year.
Shareholder activism has happened before in the BDC space. In 2015, private equity giant TPG via its BDC successfully helped block the sale of another BDC investment adviser-- which NexPoint also objected to. The following year, it sought to fire a manager at a BDC is held shares in-- although that plan ultimately failed. TPG’s 2015 scuttle helped alter how BDC M&A has been structured, by lifting shareholder expectations of what they should receive, according to Schulte Roth & Zabel’s Mahon. But investors are getting even more aggressive now.
Thomas Surgent, a partner and chief compliance officer at Highland Capital Management and NexPoint, cited a misalignment of interests and the influence of entrenched insiders on the merger deals.
“Our interests are completely aligned with stockholders, because our goal in this election is simply to ensure that there is an even playing field for all participants in the go-shop process,” he said.
A representative for New York-based Medley Capital declined to comment. FrontFour didn’t immediately respond to request for comment.
If such efforts, including Highland’s proxy bid, lead to a better outcome for Medley shareholders, they may lure more institutional investors to the industry, according to Mitchel Penn, an analyst at Janney Montgomery Scott LLC.
“These situations regarding activism teach and educate the market,” he said. “The BDC space is evolving and investors are becoming more sophisticated.”
Highland asks for votes to be received by June 3 following an annual meeting the next day.
https://www.bloomberg.com/news/articles/2019-05-24/battle-of-the-bdcs-pits-highland-capital-against-twin-brothers
Enterprising Investor
7年前
Medley Capital Corporation and FrontFour Announce Execution of Settlement Term Sheet David Lorber and Lowell Robinson to Join MCC Board of Directors and Independent Special Committee (4/16/19)
NEW YORK - April 16, 2019- Medley Capital Corporation (NYSE: MCC, "MCC") (TASE:MCC) and FrontFour Capital Group LLC ("FrontFour") today announced that they have entered into a binding term sheet (the "Settlement Term Sheet") that will form the basis of a definitive stipulation of settlement in connection with the Delaware court decision delivered on March 11, 2019 (the "Delaware Decision") relating to MCC's proposed merger (the "MCC Merger") with Sierra Income Corporation ("Sierra") and Sierra's proposed concurrent acquisition (the "MDLY Merger") of Medley Management Inc. (NYSE: MDLY, "MDLY" or "Medley").
The Settlement Term Sheet contemplates that the merger agreement for the MCC Merger would be amended to, among other matters, permit MCC to undertake a "go shop" process to solicit superior transactions to the MCC Merger, and to provide that if the MCC Merger is consummated, a settlement fund will be created, consisting of $17 million of cash and $30 million of Sierra common stock, the number of shares of which is to be calculated using the pro forma NAV reported in the future proxy supplement describing the amendments to the MCC merger agreement, for a total of $47 million of settlement consideration, which will be distributed to eligible members of a class of MCC stockholders. MCC and FrontFour have also undertaken to work together in good faith to agree to supplemental disclosures relating to the transactions consistent with the Delaware Decision.
In connection with the Settlement Term Sheet, MCC's board of directors has appointed David A. Lorber and Lowell W. Robinson to MCC's board of directors and independent special committee, with Mr. Lorber being appointed as the Chair of the special committee, effective immediately. These appointments fill the two vacancies on MCC's board of directors created by the resignations of John E. Mack and Mark Lerdal. Pursuant to the Settlement Term Sheet, FrontFour will agree to customary standstill restrictions and to vote in favor of any agreed upon amendment to the MCC Merger (if put to a vote of MCC stockholders) and the directors nominated by MCC's board of directors for election at the MCC 2019 annual stockholder meeting.
"We are pleased to welcome David and Lowell to our board of directors," said Arthur Ainsberg, lead independent director of the MCC Board. "We look forward to working with them to deliver value to MCC stockholders."
"We are pleased to have come to an understanding that is expected to provide MCC stockholders with considerably more value in connection with the proposed mergers, if consummated, and new, independent voices in the boardroom to help steer the 'go shop' process to solicit superior transactions. We look forward to working with our fellow board members," said David Lorber of FrontFour.
The Settlement Term Sheet also contemplates amending the merger agreements for the MCC Merger and the MDLY Merger to extend the outside date to October 31, 2019. If the proposed amendments to the MCC and MDLY merger agreements have not been entered into by May 15, 2019, the Term Sheet may be terminated by MCC or FrontFour. The proposed amendments to the merger agreements will require the agreement of Sierra and there can be no assurance that such agreement will be obtained or that agreements on the amendments will be reached.
New Director Biographies:
David A. Lorber is a Co-Founder of FrontFour Capital Group LLC, an investment adviser, and has served as a Portfolio Manager since January 2007. He is also a Co-Founder of FrontFour Capital Corp., an investment adviser, and has been a Principal since January 2011. Previously, Mr. Lorber was a Senior Investment Analyst at Pirate Capital LLC, a hedge fund, from 2003 to 2006. He was an Analyst at Vantis Capital Management LLC, a money management firm and hedge fund, from 2001 to 2003 and an Associate at Cushman & Wakefield, Inc., a global real estate firm, from 2000 to 2001. Mr. Lorber has served as a director of Ferro Corporation, a leading producer of specialty materials and chemicals for manufacturers, since May 2013, where he is also Lead Director, Chairman of its Governance & Nomination Committee and a member of its Compensation Committee. From April 2006 until December 2014, Mr. Lorber served as a director of Aerojet Rocketdyne Holdings, Inc. (formerly GenCorp Inc.), a technology-based manufacturer of aerospace and defense products and systems with a real estate segment. He also previously served as a director of Huntingdon Capital Corp., a real estate company, from January 2010 to May 2013 and was a Trustee for IAT Air Cargo Facilities Income Fund, a real estate company, from January 2009 to December 2009. He also served as a director of Fisher Communications Inc., an integrated media company, from April 2009 to March 2012. Mr. Lorber earned his BS from Skidmore College.
Lowell W. Robinson is an experienced executive with over thirty years of senior global strategic, financial, M&A, operational, turnaround and governance experience. From 2007 through 2009, Mr. Lowell served as the Chief Financial Officer and Chief Operating Officer of MIVA, Inc., an online advertising network, after initially joining the company in 2006 as its Chief Financial Officer and Chief Administrative Officer. Prior to that, Mr. Robinson served as the President of LWR Advisors, LLC, a strategic and financial consulting services firm, from 2002 to 2006. Previously, from 2000 to 2002, he served as the Chief Financial Officer and Chief Administrative Officer at HotJobs.com Ltd., an online recruiting and job search engine that was sold to Yahoo! Inc. Mr. Robinson was the Chief Financial Officer and Chief Administrative Officer at PRT Group Inc., a software and IT services company that he helped take public, from 1997 through 1999. Mr. Robinson also previously held senior financial positions at Advo, Inc., a direct-mail and marketing services company (1994 to 1997), Citigroup Inc., a multinational diversified financial services corporation (1986 to 1993), Uncle Bens Inc., a leading marketer of rice and a subsidiary of Mars, Incorporated (1983 to 1986), and Kraft Foods Inc., at the time one of the world's largest food companies (1983 to 1993). Currently, Mr. Robinson serves as a director of Aratana Therapeutics, Inc., a commercial-stage biopharma company focused on pet products, where he has served since May 2018. He previously served as a director of each of EVINE Live Inc. (f/k/a ShopHQ), a digital omnichannel home shopping network (March 2014 to June 2018), SITO Mobile, Ltd., a leading mobile engagement platform provider (April 2017 to June 2017), Higher One Holdings, Inc., a financial technology company focused on providing cost-saving solutions (June 2014 to August 2016), Support.com, Inc., a leading provider of cloud-based software and services (March 2016 to June 2016), The Jones Group, Inc., an American designer, marketer and wholesaler of branded clothing, shoes and accessories (2005 to April 2014), and International Wire Group, Inc., a manufacturer and marketer of wire products (2003 to 2009). Mr. Robinson's prior board experience also includes serving as a director of each of Independent Wireless One Corp., Diversified Investment Advisors Inc. and Edison Schools Inc.Mr. Robinson earned his MBA from Harvard Business School and BA in Economics from the University of Wisconsin.
Additional details regarding the Settlement Term Sheet will be included in a Form 8-K to be filed by MCC with the Securities and Exchange Commission.
ABOUT MEDLEY CAPITAL CORPORATION
Medley Capital Corporation is a closed-end, externally managed business development company ("BDC") that trades on the New York Stock Exchange (NYSE:MCC) and the Tel Aviv Stock Exchange (TASE:MCC). Medley Capital Corporation's investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies expand their businesses, refinance and make acquisitions. Medley Capital Corporation's portfolio generally consists of senior secured first lien loans and senior secured second lien loans. Medley Capital Corporation is externally managed by MCC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended. For additional information, please visit Medley Capital Corporation at www.medleycapitalcorp.com.
ABOUT FRONTFOUR CAPITAL GROUP LLC
FrontFour Capital is an investment adviser based in Greenwich, CT. FrontFour Capital focuses on value-oriented investments in North American companies.
https://www.nasdaq.com/press-release/medley-capital-corporation-and-frontfour-announce-execution-of-settlement-term-sheet--david-lorber-20190416-00274
Enterprising Investor
7年前
NexPoint Advisors Enhances Medley Capital Corporation Proposal, Urges Remaining Independent Directors to Consider Offer (4/01/19)
NexPoint sends letter to MCC Special Committee to propose enhancements, reiterate willingness to negotiate on proposal terms
DALLAS, April 1, 2019 /PRNewswire/ -- NexPoint Advisors, L.P. ("NexPoint") announced today it has proposed to Medley Capital Corporation ("MCC" or the "Company") a number of enhancements related to its original proposal to become MCC's external investment advisor (the "Proposal"). NexPoint continues to urge the remaining members of the Special Committee (the "Special Committee") of the MCC Board of Directors (the "Board") to consider the Proposal, which NexPoint believes represents the best option for MCC stockholders as compared to every other alternative available to the Company.
NexPoint communicated its proposed enhancements in a letter to the Special Committee (attached here), reiterating its willingness to negotiate on Proposal terms.
The Board and the Special Committee's previous refusals to engage with NexPoint and adequately review the Proposal were denounced by the Court of Chancery of the State of Delaware (the "Court"). On March 11, 2019 the Court issued a Memorandum Opinion that found that the Board violated its fiduciary duties for its failure to negotiate with NexPoint, among other reasons.
Despite the Court's findings, NexPoint believes the Special Committee can still act in the best interest of stockholders and fulfill its fiduciary duties by considering the Proposal, especially given the latest enhancements.
NexPoint stands ready to engage with the Special Committee immediately to negotiate and finalize the Proposal, and believes that the Proposal represents the best option for MCC stockholders.
About NexPoint Advisors, L.P.
NexPoint, together with its affiliates, is a multibillion-dollar global alternative investment manager founded in 1993 by Jim Dondero and Mark Okada. A pioneer in the leveraged loan market, the firm has evolved over 25 years, building on its credit expertise and value-based approach to expand into other asset classes. Today, NexPoint and its affiliates operate a diverse investment platform, serving both institutional and retail investors worldwide. In addition to high yield credit, the firm's investment capabilities include public equities, real estate, private equity and special situations, structured credit, and sector- and region-specific verticals built around specialized teams.
Cautionary Statement Regarding Forward-Looking Statements
These materials may contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "potential," "opportunity," "estimate," "plan" and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained in these materials that are not historical facts are based on current expectations and speak only as of the date of such materials, and involve risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of NexPoint. Although NexPoint believes that the assumptions underlying the projected results or forward-looking statements included in these materials are reasonable as of the date of such materials, any of the assumptions could be inaccurate and therefore, there can be no assurance that the projected results or forward-looking statements included herein will prove to be accurate. In light of the significant uncertainties inherent in the projected results and forward-looking statements included herein, the inclusion of such information should not be regarded as a representation as to future results or that the objectives and strategic initiatives expressed or implied by such projected results and forward-looking statements will be achieved. NexPoint will not undertake and specifically declines any obligation to disclose the results of any revisions that may be made to any projected results or forward-looking statements herein to reflect events or circumstances after the date of such projected results or statements or to reflect the occurrence of anticipated or unanticipated events.
NexPoint reserves the right to change any of its opinions expressed herein at any time as it deems appropriate and disclaims any obligation to notify the market or any other party of any such changes. NexPoint disclaims any obligation to update the information or opinions contained herein.
These materials are provided for information purposes only, and are not intended to be, nor should they be construed as, an offer to sell or the solicitation of an offer to buy any security. These materials do not recommend the purchase or sale of any security.
Past performance does not guarantee future results. Performance during the time period shown is limited and may not reflect the performance in different economic and market cycles. There can be no assurance that similar performance will be experienced.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS WITH RESPECT TO THE SPECIAL MEETING OF STOCKHOLDERS RELATED TO THE MERGER WITH SIERRA INCOME CORPORATION ("SIERRA")
NexPoint Advisors, L.P. ("NexPoint"), together with the other participants named below, have filed a definitive proxy statement with the Securities and Exchange Commission (the "SEC") to be used to solicit (the "Solicitation") proxies for, among other matters, voting against the approval of the Agreement and Plan of Merger, dated as of August 9, 2018 (the "Merger Agreement"), by and between Medley Capital Corporation (the "Company") and Sierra, and the transactions contemplated by the Merger Agreement, including the merger of the Company with and into Sierra at the Special Meeting of Stockholders of the Company, expected to take place on April 19, 2019.
Stockholders are advised to read the definitive proxy statement and any other documents related to the Solicitation because they contain important information, including information relating to the participants in the Solicitation. These materials and other materials filed by the participants with the SEC in connection with the Solicitation are available at no charge on the SEC's website at www.sec.gov. In addition, the participants in the Solicitation will provide copies of the definitive proxy statement without charge, upon request. Requests for copies should be directed to the participants.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS WITH RESPECT TO THE ANNUAL MEETING OF THE COMPANY
In connection with their intended proxy solicitation, NexPoint Advisors, L.P. ("NexPoint"), together with the other participants named below, intend to file a proxy statement with the Securities and Exchange Commission (the "SEC") to solicit stockholders in connection with the Annual Meeting of Stockholders (the "Annual Meeting") of Medley Capital Corporation (the "Company") expected to take place on May 10, 2019.
NEXPOINT STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEBSITE AT WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.
In accordance with Rule 14a-12(a)(1)(i) under the Securities Exchange Act of 1934, as amended, the following persons are anticipated to be, or may be deemed to be, participants in any such proxy solicitation: NexPoint, NexPoint Advisors GP, LLC, the general partner of NexPoint ("NexPoint Advisors GP"), Highland Global Allocation Fund ("Global Fund"), Highland Capital Management Fund Advisors, L.P., the investment advisor to Global Fund ("Highland Fund Advisors"), Strand Advisors XVI, Inc., the general partner of Highland Fund Advisors ("Strand XVI"), Highland Select Equity Master Fund, L.P. ("Select Fund"), Highland Select Equity Fund GP, L.P., the general partner of Select Fund ("Select GP"), Highland Select Equity GP, LLC, the general partner of Select GP ("Select LLC"), Highland Capital Management, L.P., the sole member of Select LLC and the investment advisor to Select Fund ("Highland Capital"), Strand Advisors, Inc., the general partner of Highland Capital ("Strand") and James D. Dondero, the President of NexPoint Advisors GP and Strand and ultimate control person of Strand XVI, NexPoint Advisors GP and Strand (collectively, the "NexPoint Group"), and the nominees for election as directors of the Company (the "Nominees", and together with the NexPoint Group, the "Participants"), who include Mark T. Goglia and Stephen A. Mongillo. The NexPoint Group has an interest in the matters to be acted on at the Annual Meeting as they intend to nominate two independent directors at the Annual Meeting and NexPoint has stated its willingness to step-in as the external investment manager of the Company if the merger transaction to be considered at the Special Meeting of Stockholders of the Company expected to take place on April 19, 2019, is not approved by stockholders. Certain of the Participants hold direct or indirect interests in securities of the Company as follows: Global Fund holds and beneficially owns 335,000 shares of common stock of the Company and Highland Fund Advisors, Strand XVI and Mr. Dondero indirectly beneficially own such shares of common stock of the Company due to their relationship with Global Fund; Select Fund holds of record and beneficially owns 100 shares of common stock of the Company and Select GP, Select LLC, Highland Capital, Strand and Mr. Dondero indirectly beneficially own such shares of common stock of the Company due to their relationship with Select Fund. Each of the Nominees has an interest in being nominated and elected as a director of the Company, but no Nominee beneficially owns any shares of common stock of the Company.
Media Contact: Lucy Bannon | (972) 419-6272 | lbannon@highlandcapital.com
https://www.prnewswire.com/news-releases/nexpoint-advisors-enhances-medley-capital-corporation-proposal-urges-remaining-independent-directors-to-consider-offer-300821596.html
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