NexPoint Advisors Encourages Shareholders to Vote Against Merger Proposal
February 5, 2019 | Luke Schmidt | Blue Vault
On February 5, 2019, NexPoint Advisors, L.P. (“NexPoint”) issued a press release reiterating its opposition of Medley Management Inc’s (“MDLY”) role in the currently proposed merger between Medley Capital Corporation (“MCC”) and Sierra Income Corporation (“Sierra”). NexPoint is encouraging stockholders of both MCC and Sierra to vote against the proposed merger at the special meeting of stockholders scheduled for February 8, 2019.
NexPoint now joins leading independent proxy advisory firm Institutional Shareholder Services (“ISS”) in urging stockholders to vote against the proposed merger. ISS reversed its initial recommendation following NexPoint’s submission of a competing proposal to both MCC and Sierra stockholders. ISS made its initial recommendation on January 27, 2019, recommending stockholders vote for the proposed merger. NexPoint previously submitted their proposal to the respective special committees of the boards of directors of both MCC and Sierra on January 31, 2019. As of February 5, 2019, NexPoint has only received an acknowledgement of receipt of its proposal, and only from counsel to Sierra’s special committee. NexPoint continues to believe that their proposal is superior to the currently proposed merger.
Many MCC stockholders have begun to voice their support for an alternative to the currently proposed merger and have criticized the MCC board of directors for ignoring NexPoint’s submission. FrontFour Capital Group LLC, a significant shareholder of MCC, commented, “[T]he submission of the NexPoint proposal and the manner in which [MCC] sat on and then dismissed NexPoint’s initial indication of interest heightens our concern that the Board refuses to take sufficient steps to review alternatives that are most favorable to [stockholders]. We reiterate our belief that the NexPoint proposal represents a credible, superior offer and we call upon the Special Committee to immediately review all strategic alternatives to maximize value for all shareholders.”
While NexPoint has yet to receive a direct response regarding its proposal, MCC and Sierra issued a press release on February 2, 2019 disputing NexPoint’s value proposition, specifically challenging the assertion that NexPoint’s proposal offers over $225 million of net value in favor of stockholders. NexPoint believes the concern by MCC and Sierra is an attempt to distract stockholders from the conflicts of interest associated with the merger.