Ranger hits back at new Oaktree Capital claim

By Daniel Lanyon on 27th April 2018

Alternative Credit

The latest move in the battle for the Ranger Direct Lending fund has seen Oaktree fire another shot across the bow.

Ranger hits back at new Oaktree Capital claim
Image source: https://goo.gl/co8358

The past few days have been a rollercoaster for investors in the Ranger Direct Lending fund.

Its second largest shareholder Oaktree Capital has been somewhat in charge of the rollercoaster’s on/off button – to extend the metaphor - calling for the beleaguered portfolio to be wound down.

Oaktree said in an open letter Tuesday that both the investment trust vehicle structure is not ideally suited to specialty credit strategies and that having a North American credit portfolio was overly idiosyncratic.

“We have now come to the conclusion that RDL shareholders’ interests are best served by winding down the Company and returning its capital to its shareholders, which represents both the lowest risk and highest return path forward,” Oaktree said in an open letter.

The shares popped 8 per cent on the news but Ranger’s board swiftly rejected it.

Now Oaktree has, in another public letter published today, claimded the Ranger fund is at a “critical juncture and facing major decisions that will impact future shareholder value”.

For this reason, it says it is important for a shareholder vote in the near future to decide on the direction of the portfolio and the appointment of a second manager.

Oaktree said in the letter:

“We understand that you are required to hold a shareholder vote for any material change in investment policy; however, we urge you to publicly commit to a full shareholder vote on any future investment management arrangements with which the Board wishes to proceed, regardless of whether it is required.”

“In our April 11 letter to you, we outlined the structural challenges faced by Ranger as well as the clear shareholder benefits of a wind-down. At such an important time for the Company, we believe it is imperative for you to give all Ranger shareholders a voice in determining the path forward. This would demonstrate that the Board takes its fiduciary obligations to the Company seriously and is acting in the best interests of the Company and of its shareholders as a whole.”

Ranger has quickly hit back saying it will allow shareholders a vote on the subject of a new investment manager but that this had already been stated by the firm before Oaktree's request.

“Ranger announced on 29 January that its Management Engagement Committee would be reviewing Ranger Direct Lending's management arrangements. Prior to announcing the review, the terms of reference were set in writing to include that any new investment management arrangements for the Company would be conditional on shareholder approval, notwithstanding that the appointment of a new investment manager, of itself, does not require shareholder approval.” 

Expect more open letters.

Comments

AltFi Berlin Summit 2019

AltFi is coming to Berlin this Winter for our first annual Summit in the City.

18th November 2019