Pressure mounts on Ranger Direct Lending board ahead of AGM

By Daniel Lanyon on 6th June 2018

Alternative Credit

The direct lending focused investment trust is seeing fresh calls for a change of direction from shareholders.

Pressure mounts on Ranger Direct Lending board ahead of AGMImage source: https://goo.gl/HGRMz2

Oaktree Capital, an activist investor in the Ranger Direct Lending fund has published a new open letter to shareholders in the embattled portfolio urging them to support its proposals to appoint new directors to its board. 

The LA-based asset manager, who increased its holding in Ranger in March 2018, says Ranger board has presided over a “track record of poor stewardship and value destruction” and that “urgent change is needed”.

It is not the first open letter from Oaktree on the subject of Ranger’s future, following on from a series of exchanges in April reinforced by other calls from signifanct shareholders such as LIM Advisors.

Both Oaktree and LIM Advisors are calling for the appointment of two additional directors each.  LIM Advisors is also proposing the removal of the chairman.

However, Oaktree argues that recent events have reinforced its view. It says the board of the investment trust has failed to "meanfully enage with a number of significant Zero Dividend Preference (“ZDP”) shareholders and therefore demonstrating it has not "seriously considered strategic options – including exploring a wind-down".

Also, it argues that despite the board "promising to publish a circular" with the details of the proposed Ares investment management take over this has not yet materialised. 

Analysts at Liberum say the latest letter is adding to pressure on Ranger ahead of its AGM on 19 June but as the circular has not been published yet, the EGM on the proposed appointment of Ares as manager will not be on the same day as the AGM. 

“The board stated on Friday that it had concluded the proposed changes to the manager and investment policy were not materially prejudicial to the interests of ZDP holders. No vote was therefore planned for the ZDP holders. Based on Oaktree's letter, there now appears to be rising opposition to this among ZDP holders. The potential additional repayment required to ZDP holders is the fly in the ointment for Oaktree's wind-down proposals,” Liberum said.

You can see the full text of the letter here.

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