NexPoint Advisors L.P and other NexPoint Group affiliates, have filed preliminary proxy materials with the SEC to nominate two independent director candidates to the Medley Capital (NYSE: MCC) board and are urging shareholders to vote for those nominees at the company’s yet-to-be scheduled annual meeting. NexPoint and its affiliates own a total of 335,100 shares of MCC common stock.
NexPoint’s Highland Select Equity Master Fund L.P plans to nominate Stephen Mongillo and Mark Goglia as independent directors of Medley Capital, a publicly traded business development company.
Mongillo is the chairman and principal shareholder of AMPF Inc., a wholesale distributor of picture frame supplies, and a director of CVR Energy Inc. (NYSE: CVI), a holding company focused on the petroleum refining and nitrogen fertilizer manufacturing industries. He was a managing director of Icahn Capital LP, the entity through which Carl Icahn managed third-party investment funds, and worked as a senior managing director at Bear Stearns for 10 years.
Goglia leads the corporate division of Condon Tobin Sladek Thornton PLLC, a Dallas-based law firm, and previously worked at a number of global law firms, including Jones Day, Brobeck, and DLA Piper, where he oversaw a client list that included Texas Instruments, Albertsons, Alon USA Energy, Cisco Systems, Kaiser Aluminum, Micron and others.
“The individuals that we have nominated are highly-qualified, capable and ready to serve the stockholders of MCC,” NexPoint’s proxy filing stated. “Even though we are seeking to become [Medley’s] external investment adviser, we believe our nominees – who are unaffiliated with any members of the NexPoint Group – will act solely in the best interests of all MCC stockholders. We further believe that electing our two director nominees will deliver an appropriate message to the remaining directors who approved the Medley mergers regarding their obligations to the company’s stockholders.”
NexPoint submitted a competing management proposal back in January and publicly criticized Medley’s planned merger with affiliates Sierra Income Corporation, a non-traded BDC, and Medley Management (NYSE: MDLY), which controls both Sierra and Medley Capital.
As part of the merger proposal, Sierra seeks to merge with Medley Capital, and then merge with Medley Management, with Sierra being the surviving company that is structured as a publicly-traded BDC.
Proxy advisory firms Glass Lewis & Co. and Institutional Shareholder Services, as well as Front Four Capital Group LLC, a significant Medley Capital shareholder, criticized Medley’s handling of NexPoint’s offer, which was rejected by the company, and urged shareholders to vote against the merger.
FrontFour later filed a class action lawsuit against Medley and its board in the Delaware Chancery Court, alleging breach of fiduciary duties to stockholders in connection with the merger. Medley Management and Sierra were also named in the lawsuit for allegedly aiding and abetting the breaches.
The court ruled that Medley Capital’s directors breached their fiduciary duties in entering into the proposed merger and halted the vote until investors were provided with corrective disclosures on the deal.
Medley Capital and FrontFour later agreed to certain settlement terms in connection with the court’s decision that included amending the proposed merger agreements to include a “go shop” process to solicit superior transactions.
Additionally, if the merger is consummated, a settlement fund will be created, consisting of $17 million of cash and $30 million of Sierra common stock, and distributed to eligible members of a class of MCC stockholders.
Following the resignations of John Mack and Mark Lerdal, FrontFour co-founder David Lorber and Lowell Robinson, the former CFO and COO of online advertising network MIVA Inc., were appointed to Medley Capital’s board and independent special committee, with Lorber being appointed as the chair of the special committee.
The three companies have postponed their respective special meetings of stockholders on the proposed merger and anticipate holding the meetings no later than the third quarter of 2019.