Leading proxy advisory firms both support removal of incumbent directors Seth Taube and Arthur Ainsberg from MCC board
DALLAS, May 24, 2019 – NexPoint Advisors, L.P. (“NexPoint”) announced today that Institutional Shareholder Services (“ISS”) and Glass Lewis, two leading independent proxy advisory firms, both issued reports recommending that stockholders of Medley Capital Corporation (“MCC”) (NYSE:MCC) vote FOR NexPoint’s independent director nominees at the June 4, 2019 annual meeting of stockholders (the “Annual Meeting”). In their proxy analyses, both ISS and Glass Lewis found sufficient reason to support the removal of the two incumbent directors, Seth Taube and Arthur Ainsberg, who are up for re-election.
The following provides summaries of the respective reports. To vote in accordance with the recommendations from ISS and Glass Lewis, MCC stockholders should DISCARD any WHITE proxy card, and vote FOR Stephen A. Mongillo and Mark T. Goglia, NexPoint’s nominees, using their BLUE proxy card.
Visit www.MedleyCapitalVote.com to learn more about NexPoint’s nominees and to access additional information ahead of the Annual Meeting.
ISS Report on MCC
In summary, 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”; and
- That NexPoint “has presented a compelling case that…its nominees are the best option available to achieve that change.”
ISS raised specific issues about the financial situation at MCC, noting:
- The fact that the “[proxy] contest has an element of urgency because net asset values have declined”;
- The threat that if “net asset value is below [a $275 million] threshold for two consecutive quarters…[outstanding] notes could be accelerated, creating substantial distress for the company”; and
- The presence of other “worrying trends in the company’s operating performance.”
ISS 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”; and
- The fact that the “nominees appear to have participated in a ‘stonewalling’ response to [NexPoint].”
In its support for NexPoint’s nominees, ISS noted:
- That NexPoint has “specifically and intentionally selected unaffiliated nominees so that they will act solely in the best interests of all MCC stockholders to evaluate competing strategic alternative options”; and
- That “ISS’ engagement with the [NexPoint] nominees suggests that their independence is credible.”
Glass Lewis Report on MCC
In summary, 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”; and
- 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.”
Glass Lewis highlighted broad issues with the current board, along with more specific concerns about MCC’s director nominees, including:
- The “appalling conduct by MCC directors,” which the Delaware opinion “describes at considerable length”;
- That “MCC’s board structure raises concerns about its objectivity and independence as well as its ability to perform its proper oversight”;
- The “evidence that Arthur Ainsberg has failed to represent the best interests of MCC shareholders,” specifically noting his “fail[ure] to understand that the prior sale process for MDLY did not ‘effectively’ shop MCC,” which Glass Lewis described as “an egregious error for the chairman of a special committee tasked with seeking the best alternative for shareholders”; and
- “[T]hat removing Seth Taube from the board is warranted given his status as an affiliate,” specifically noting that his removal would help “ensure that shareholder interests are placed above all else.”
Glass Lewis conveyed its support of NexPoint’s nominees with its views that the nominees:
- “[A]re qualified to serve on the MCC board, with considerable professional experience and relevant skills”;
- “[A]re not affiliated with NexPoint, and [Glass Lewis] see[s] no reason to doubt their independence or objectivity”; and
- “[W]ould represent the interests of all shareholders in accordance with their fiduciary duty if elected to the board.”
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 build around specialized teams. For more information visit www.nexpointfunds.com.
NexPoint Advisors, L.P. (“NexPoint”) has filed a definitive proxy statement with the Securities and Exchange Commission (the “SEC”) together with the other participants named therein to be used to solicit (the “Solicitation”) proxies for, among other matters, the election of its slate of director nominees at the Annual Meeting of Stockholders (the “Annual Meeting”) of Medley Capital Corporation (the “Company”) expected to take place on June 4, 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’ proxy solicitor.
Highland Capital Management / NexPoint Advisors
Rick Grubaugh or Peter Aymar
D.F King & Co.