Medley Capital Corporation (NYSE: MCC), a publicly traded business development company, claim that according to the preliminary vote count provided by Alliance Advisors, the firm’s proxy solicitor, shareholders voted to re-elect Arthur Ainsberg and Seth Taube to its board at the 2019 annual meeting of shareholders.
NexPoint Advisors recently launched a proxy fight against the company and nominated Stephen Mongillo and Mark Goglia as independent directors, which were also the recommended choice of two independent proxy advisory firms following their nomination.
Medley said that it is awaiting the report of the independent inspector of elections before releasing any further statements about the vote. The inspector expects to issue a preliminary tabulation of the results within the next several business days.
Thomas Surgent, NexPoint partner and compliance and legal officer, said “The results are preliminary—notably, if Medley Seed Funding Shares were required to echo vote, as they committed to do with respect to the merger, then our nominees would prevail.”
He explained, “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 recommendations of Institutional Shareholder Services and Glass Lewis, the support we received from the shareholders with whom we spoke was resounding and included some of the most recognized names in the industry.”
As previously reported, Taube and Ainsberg were recently found guilty of breaching their fiduciary duties to shareholders by the Delaware Chancery Court after being sued by stockholder FrontFour Capital Group over a proposed merger deal between the company and its affiliates Sierra Income Corp and Medley Management. The court halted the merger vote until investors were provided with corrective disclosures on the deal.
And just last week, independent proxy advisory firms Institutional Shareholder Services and Glass Lewis both issued reports recommending MCC stockholders vote for NexPoint’s slate of independent director nominees instead of incumbents Taube and Ainsberg.
“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,” added Surgent. “We believe we have energized not only the shareholder base, but also the BDC industry as a whole.”
Medley also noted that the preliminary vote count indicates that shareholders voted for the ratification of the appointment of Ernst & Young LLP to serve its independent registered public accounting firm for the fiscal year ending September 30, 2019.
The Medley/Sierra merger proposal includes three affiliated firms, Medley Capital, Sierra Income Corporation, a non-traded BDC, and Medley Management (NYSE: MDLY), a publicly-traded asset management firm.
Sierra is seeking to acquire Medley Capital and Medley Management, with Sierra being the surviving company that would be structured as a publicly-traded BDC. Medley Capital and Sierra are both controlled by Medley Management.
NexPoint submitted a competing proposal back in January to the Medley Capital and Sierra special committees seeking to replace Medley Management by establishing a new investment advisory agreement with the surviving company of the merger. The proposal was rejected by both companies.