The current directors at United Development Funding IV will remain in place, likely easing the path to the transaction with Ready Capital, following the postponement of its annual meeting.
Prior to the meeting, challenger NexPoint Real Estate Opportunities said it would not appear at or vote any of its proxies at the Sept. 10 meeting, questioning the timing of
Because NexPoint failed to vote, the meeting, which was court ordered after UDF IV did not hold one in eight years, lacked a quorum, was adjourned and will not be rescheduled.
"Its decision to abstain from voting or submitting the collected proxy votes appears to have been driven by the fact that shareholders rejected NexPoint's candidates in favor of the trust's candidates," a statement from the UDF IV board said. "Out of the 30,663,551 shares outstanding on the record date, shareholders voted a minimum of 10,824,887 shares for the reelection of each of Steven J. Finkle, Lawrence S. Jones, J. Heath Malone and Phillip K. Marshall."
Those trustees will now serve until the 2025 annual meeting if it is held; that would mean the transaction was delayed or canceled.
Ready Capital provides financing for investor and
If the NexPoint shares had been voted, a quorum would have been achieved and UDF IV's nominees would have won by a three-to-one margin, the statement claimed.
NexPoint said in an email after the UDF IV statement was released that the vote was much closer.
"As they have done many times before, the UDF IV Board appears to be misleading shareholders – NexPoint believes this vote was much closer than reported by UDF IV, potentially within a few percentage points, demonstrating substantial shareholder dissatisfaction with UDF IV's leadership," the email said.
UDF IV remains undeterred after the meeting cancellation.
"We remain committed to protecting and advancing the interests of UDF IV shareholders, including working to satisfy the conditions for the pending acquisition of UDF IV by Ready Capital Corporation, which we expect to close in the first half of 2025," the statement said.
The tensions between NexPoint and UDF IV go back several years. In 2016, law enforcement investigated an affiliate of UDF IV,
In its own press release prior to the meeting, NexPoint said it would not necessarily vote down the Ready Capital transaction, but once elected, its trustees would have evaluated the deal and then make a recommendation.
"Delaying trustee elections until late 2025 would present just another example of current management continuing to manipulate the corporate machinery to maintain control for their own personal benefit – this is unacceptable," NexPoint said in the pre-meeting statement. "UDF IV shareholders deserve better governance and accountability."
Its move forces all UDF IV trustees to stand for election at that 2025 meeting. "These actions are necessary because UDF IV shareholders deserve better governance and accountability," NexPoint continued.
