Declines to Appear at Annual Meeting, Calls
for Adjournment of Meeting Until UDF IV Provides Proper Disclosure
on Recently Announced Merger with Ready Capital
DALLAS, Dec. 10,
2024 /PRNewswire/ -- NexPoint Real Estate
Opportunities, LLC (together with its affiliates "NexPoint") today
announced it will not appear nor vote any proxies at the United
Development Funding IV ("UDF IV" or the "Company") Annual Meeting
of Shareholders ("Annual Meeting") being held today, December 10, 2024.
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-Jones. Both Egan-Jones and Glass Lewis recommend that UDF IV
shareholders vote "FOR" all NexPoint
nominees, Paul S. Broaddus, Edward N.
Constantino, John A. Good and Julie Silcock. Key
excerpts include:
"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 Maryland by NexPoint – UDF has notionally
elevated the stakes by announcing a prospective acquisition of the
Trust by Ready Capital…All else held equal, this framework seems to
ask investors to consider the prospect of potentially forfeiting a
liquidity event if NexPoint is successful in its effort to nominate
alternate candidates to the UDF board."2
"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.