NexPoint Provides Update on UDF IV Proposal and Special Meeting as Ready Capital Earnings Report Heightens Concerns About Proposed Merger
Steep Decline in RC Stock Price Following Q4 2024 Earnings Release Has Potential to Erase More Than $30 Million in Value for UDF IV Shareholders Under Proposed Merger
NexPoint Urges Board to Reconsider Hasty Rejection of NexPoint's Proposal and Postpone Special Meeting to Properly Evaluate Transactions on Behalf of Shareholders
DALLAS, March 3, 2025 /PRNewswire/ -- NexPoint Real Estate Opportunities, LLC (together with its affiliates "NexPoint") today provided an update on United Development Funding IV ("UDF IV") ahead of the upcoming 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"). On February 28, 2025, the UDF IV Board of Trustees (the "Board") announced it rejected NexPoint's competing proposal, making no attempt to engage with NexPoint to pursue the best transaction on behalf of shareholders. NexPoint urges the Board to reconsider its position, especially in light of Ready Capital's Q4 2024 earnings report, released today, which reinforces concerns about the stability of the company and the ultimate value delivered to UDF IV shareholders under the Ready Merger.
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 25%. RC stock traded as low as $4.78 per share, which equates to $1.99 per UDF IV share under the Ready Merger.
Original Announcement* | Today** | |
Ready Capital Share Price | $7.37 | $4.78 |
Price Per UDF IV Share | $3.07 | $1.99 |
Implied Value | $94 million | $61 million |
*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
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SOURCE NexPoint Advisors, L.P.