NexPoint Provides Update on UDF IV Proposal and Special Meeting as Ready Capital Earnings Report Heightens Concerns About Proposed Merger
Rhea-AI Summary
NexPoint has issued an urgent update regarding the proposed merger between United Development Funding IV (UDF IV) and Ready Capital (RC), scheduled for shareholder vote on March 4, 2025. Following Ready Capital's concerning Q4 2024 earnings report, RC's stock price plummeted by over 25%, trading as low as $4.78 per share, which translates to $1.99 per UDF IV share under the merger terms.
The steep decline could potentially erase more than $30 million in value for UDF IV shareholders. NexPoint criticizes the UDF IV Board's hasty rejection of their competing proposal on February 28, 2025, and urges the Board to postpone the Special Meeting by one month to properly evaluate both transactions and Ready Capital's financial stability.
Positive
- NexPoint offers competing proposal as alternative to Ready Capital merger
Negative
- Ready Capital stock dropped over 25% post Q4 2024 earnings
- Potential $30M+ value loss for UDF IV shareholders under merger terms
- RC stock low of $4.78 equals only $1.99 per UDF IV share
News Market Reaction
On the day this news was published, NXDT declined 1.26%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Steep Decline in RC Stock Price Following Q4 2024 Earnings Release Has Potential to Erase More Than
NexPoint Urges Board to Reconsider Hasty Rejection of NexPoint's Proposal and Postpone Special Meeting to Properly Evaluate Transactions on Behalf of Shareholders
The market's reaction reflected these concerns, with RC's stock price experiencing a steep decline following today's earnings release, closing down more than
Original Announcement* | Today** | |
Ready Capital Share Price | ||
Price Per UDF IV Share | ||
Implied Value |
*Based on Ready Capital's closing share price on November 29, 2024 **Based on lowest trading price on March 3, 2025 |
This decline erases significant value from the Ready Merger. The Board has a fiduciary duty to act in the interests of UDF IV shareholders. This includes re-evaluating the Ready Merger in light of new financial information and considering alternative proposals that better serve shareholders.
While NexPoint believes it submitted a superior proposal under the original purported value of the Ready Merger, today's market activity makes clear that the Board's hasty rejection of NexPoint's proposal is not in the best interest of shareholders. NexPoint thus urges the Board to withdraw its rejection and postpone the Special Meeting for one month to engage with NexPoint and properly evaluate the transactions on behalf of shareholders. This would also allow time for the Board to further evaluate the health and stability of Ready Capital—and the potential impact to UDF IV shareholders under the Ready Merger—following its troubling earnings report.
For More Information:
NexPoint encourages shareholders to visit udfaccountability.com for more information. Shareholders can complete the contact form on the site to receive ongoing updates about UDF IV, the Ready Merger, and any competing proposals.
About NexPoint
NexPoint Real Estate Opportunities, LLC is a wholly owned subsidiary of NexPoint Diversified Real Estate Trust, Inc. (NYSE: NXDT), a diversified real estate investment trust externally advised by an affiliate of NexPoint Advisors, L.P.
NexPoint Advisors, L.P. is an SEC-registered adviser on the NexPoint alternative investment platform. For more information visit www.nexpoint.com
IMPORTANT INFORMATION
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding beliefs about the ultimate economic consequences of the RC Merger and NexPoint's proposed transaction and other statements identified by words such as "expect," "intend," "believe," the negative version of these words and similar expressions that do not relate solely to historical matters. Forward-looking statements are based on NXDT's current expectations and assumptions regarding capital market conditions, NXDT's business, the economy and other future conditions. Forward-looking statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond NXDT's control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions, and those described in greater detail in our filings with the Securities and Exchange Commission, particularly those described in NXDT's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the NXDT's Annual Report on Form 10-K and other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward-looking statement. Any forward-looking statement made in this press release speaks only as of the date on which it is made. NXDT undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
CONTACT INFORMATION
For Additional Information/Updates on UDF IV
Website: www.udfaccountability.com
Email: udfinvestors@nexpoint.com
Media Contacts
Lucy Bannon (NexPoint): lbannon@nexpoint.com
Paul Caminiti/Pamela Greene (Reevemark): nexpointteam@reevemark.com
NexPoint Investor Relations
Kristen Thomas: ir@nexpoint.com
View original content:https://www.prnewswire.com/news-releases/nexpoint-provides-update-on-udf-iv-proposal-and-special-meeting-as-ready-capital-earnings-report-heightens-concerns-about-proposed-merger-302390728.html
SOURCE NexPoint Advisors, L.P.
FAQ
How much value could UDF IV shareholders lose after Ready Capital's stock price drop?
When is the UDF IV Special Meeting scheduled for the Ready Capital merger vote?
What happened to Ready Capital's stock price after their Q4 2024 earnings report?
What is NexPoint requesting from the UDF IV Board regarding the merger?
