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

NexPoint Challenges UDF IV's Merger Decision

In a recent announcement, NexPoint Real Estate Opportunities, LLC, alongside its affiliates, revealed its intentions regarding United Development Funding IV (UDF IV) and its proposed merger with Ready Capital. Scheduled for a vote on March 4, 2025, this merger has raised several concerns among stakeholders, leading NexPoint to take a stand.

Postponement of Shareholder Meeting

NexPoint has urged the UDF IV Board of Trustees to postpone the Special Meeting by 30 days. This delay, they argue, would allow for thorough consideration of competing proposals and ensure that the board is better equipped to represent the shareholders' best interests.

The call for postponement comes amidst growing anxiety over the current transaction with Ready Capital, which NexPoint describes as rushed and misaligned with shareholder welfare. They express skepticism about the board's capability to negotiate effectively after years of perceived negligence toward shareholder interests.

Emergence of Competing Proposal

NexPoint is not only suggesting a delay but also intends to submit a competing proposal. This proactive approach aims to provide UDF IV stakeholders with a better alternative that could potentially realize greater value. Interested parties can follow updates about this competing proposal on saveudf.com.

According to recommendations reported by Glass Lewis, there are pressing questions surrounding the self-serving nature of the board's recent actions. NexPoint’s concerns echo this sentiment, indicating a lack of transparency regarding the motivations behind the merger.

Major Concerns Regarding Ready Capital Merger

The suggested merger with Ready Capital has prompted substantial criticisms focused on the negative implications for shareholders:

• - Economic Viability: UDF IV shareholders would receive a major part of their compensation in Ready Capital stock, whose financial performance has faltered recently, worsening liquidity issues for UDF IV shareholders.
• - Disproportionate Gains for Insiders: The merger appears to disproportionately benefit UDF IV’s board, management, and insiders, rather than its shareholders. Extensive indemnifications included in the merger agreement could shield these individuals from accountability over past mismanagement of funds.
• - Shareholder Rights: NexPoint’s insistence on limited releases and indemnifications aims to prioritize shareholders' rights, which they feel have been compromised under current management.

Each of these points highlights not only a serious misalignment of interests but also the urgency for the board to reconsider its strategies.

Voting Dynamics and Shareholder Engagement

Given the gravity of these concerns, NexPoint calls for shareholders to withhold votes on the merger proposal until adequate review and engagement from the board occurs. Previous attempts by NexPoint to interact constructively with the board have been met with resistance, fueling the push for a strategic change in leadership.

Conclusion

Investors and stakeholders are advised to stay informed through NexPoint's updates as they navigate this complex situation. By advocating for a thoughtful approach to the merger and pursuing competitive proposals, NexPoint aims to foster a climate where shareholder interests are front and center. Thus, maintaining open communication is critical as they work to safeguard not just their investment but also the future of UDF IV.

For more insights on this evolving situation and to stay updated, NexPoint encourages visitors to their information forum at saveudf.com.