Implores UDF IV Board to Postpone March 4 Special Meeting for One Month to Engage with NexPoint and Appropriately Evaluate Proposal
NexPoint Will Not Vote at Special Meeting Without Due Consideration of Proposal
DALLAS, Feb. 27, 2025 /PRNewswire/ -- NexPoint Advisors, L.P. (together with its affiliates "NexPoint") today announced NexPoint Real Estate Opportunities, LLC has submitted a competing proposal to the Board of Trustees of United Development Funding IV ("UDF IV" or "the Trust") ahead of the Special Meeting of UDF IV Shareholders (the "Meeting"), scheduled for March 4, 2025, to vote on the proposed merger of UDF IV with Ready Capital (NYSE: RC) (the "Ready Merger").
The confidential proposal submitted by NexPoint mirrors many elements of the Ready Merger but provides shareholders with superior economic terms, including enhanced balance sheet distributions, full entitlement to Contingent Value Rights ("CVR") loan proceeds, and potentially large indemnification reimbursements. Specifically, NexPoint's offer contemplates balance sheet distributions that it believes will provide shareholders with a higher pre-closing dividend than the Ready Merger. Shareholders would also receive 100% of the net principal and interest recovered on the CVR loans. By comparison, the Ready Merger entitles Ready Capital to 100% of the CVR loan proceeds until it has recovered $13.3 million net, and thereafter shareholders only receive credit for 60% of additional net recoveries, which UDF IV estimates to be as much as $20 million. Additionally, NexPoint proposes to cease further indemnification payments for the imprisoned management team and recipients of the improper indemnity payments associated with the SEC disgorgement and intends to recover those improperly advanced legal fees and indemnity payments, with 100% of net recoveries being distributed to shareholders.