#United States #Dallas #NexPoint #UDF IV #Ready Capital

NexPoint's Concerns Regarding UDF IV Annual Meeting

NexPoint Real Estate Opportunities, LLC, along with its affiliates, has recently taken a provocative stance regarding its absence from the United Development Funding IV (UDF IV) Annual Meeting held on December 10, 2024. The firm has loudly criticized UDF IV's decision to announce a merger with Ready Capital just one week before the meeting, describing the timing as an apparent ploy to sway shareholder votes during a pivotal election for the Board of Trustees.

The essence of NexPoint's objections lies in what it perceives as a serious lack of transparency surrounding the merger and the absence of essential disclosures that would allow shareholders to make informed decisions. This concern was accentuated by the unexpected timing of the merger announcement, which raised red flags for NexPoint. It believes that the board is not only misleading shareholders but is also leveraging the merger's potential benefits as a tool to inhibit fair board elections.

According to NexPoint, the suggestion by UDF IV that shareholders vote for its nominees implies a vote against the merger is not only incorrect but fundamentally manipulative. NexPoint's position is clear: if UDF IV intends to treat the Annual Meeting as a referendum on the merger, it should adjourn the meeting until adequate disclosures are furnished to its shareholders.

NexPoint has strongly advocated for better governance and accountability within UDF IV, emphasizing that it has been years since shareholders were provided with a genuine opportunity for oversight and effective voting on board elections. The unique situation this year, marked by legal challenges leading to heightened scrutiny, has brought significant visibility to shareholder governance issues that have long been overlooked.

Adding weight to NexPoint's argument are findings from two independent proxy advisory firms, Glass Lewis and Egan-Jones, both of which have voiced their support for NexPoint's nominees. They echo NexPoint’s suspicions about the motivations behind the merger announcement, calling it a certain reaction to the looming vote. Their assessment indicates skepticism regarding the legitimacy of the board's governance practices and the potential conflict of interest arising from their proposal for a merger, particularly with its lack of critical disclosures that would normally accompany such significant corporate transactions.

As shareholders gather for this pivotal meeting, there is a palpable tension regarding whether UDF IV can secure the necessary quorum to proceed. NexPoint has expressed that without sufficient information, shareholders will feel pressured into accepting terms that could ultimately undermine their interests, further worsening the longstanding issues of liquidity and governance within UDF IV.

In conclusion, NexPoint's choice to abstain from the meeting signals its commitment to advocating for its shareholders and pushing back against what it perceives to be manipulative practices by UDF IV. Looking forward, NexPoint continues to demand enhanced clarity and accountability, urging shareholders to consider the far-reaching implications of their votes during this critical junction for UDF IV.