Proxy Contest Sheds Light on Widespread Support for Change at MCC
DALLAS, June 5, 2019 – NexPoint Advisors, L.P. (“NexPoint”), a stockholder of Medley Capital Corporation (“MCC” or the “Company”) (NYSE:MCC), responded to the preliminary results of the Company’s annual meeting of stockholders (the “Annual Meeting”), which concluded yesterday. The preliminary vote count from the Annual Meeting apparently indicates that stockholders voted to re-elect incumbent directors Seth Taube and Arthur Ainsberg to the MCC board, despite the Delaware Court opinion and contrary to the recommendations of ISS and Glass Lewis.
However, MCC stakeholders should be aware that Medley Management itself dictated these preliminary results—had affiliate Medley Seed Funding shares echo voted, as they have committed to the Securities and Exchange Commission that they will do with respect to the merger, then NexPoint’s nominees would prevail.
The only significant non-insider support for MCC’s nominees was from a single individual adviser and a Medley joint venture partner. Other than these groups, which were apparently willing to discount the Delaware opinion and proxy advisory firm recommendations, the support NexPoint received from the shareholders was resounding and included some of the most recognized names in the industry.
Absent these groups and insiders, we understand that the incumbents received minimal support, representing less than 5% of outstanding shares.
“Regardless of the ultimate outcome of the election, we believe we have been overwhelmingly successful in our objective of bringing these important issues to light and championing the fiduciary interests of stockholders,” said Thomas Surgent, a partner and legal and compliance officer at NexPoint. “We believe we have energized not only the shareholder base, but also the BDC industry as a whole.”
NexPoint hopes that those developments help ensure the MCC board conducts a fair “go-shop” process, and looks forward to participating fully.
That said, the concerns that NexPoint previously raised regarding the pitfalls of the go-shop process remain, as none of the structural issues—including the potential for deadlock on the special committee and the narrow definition of “superior proposal” under the merger agreement—have yet to be addressed. Finally, NexPoint hopes that the board has taken note of the fact that, especially after removing Medley management’s vote, this vote reflects that there is nowhere near the stockholder support needed to approve the mergers.
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 built around specialized teams. For more information visit www.nexpointfunds.com.
Highland Capital Management / NexPoint Advisors