RANGER Direct Lending (RDL) has rejected Oaktree’s recommendation for the fund to shut down, stating that it is dealing with the issues which were raised in the shareholder’s letter, which described RDL as a “sub-standard platform.”
“The Board notes today that Oaktree Capital Management has publicly released private correspondence between itself and the Board of Ranger,” the letter read.
“The Company notes that Oaktree’s announcement today merely publishes their letter dated Wednesday 11 April 2018 in which they relayed the “conclusion” that a winding down was the best way forward for the Company. Since the receipt of Oaktree’s letter, the Company and its advisors have communicated to Oaktree that all of the relevant issues raised by Oaktree are already being dealt with as part of the Review Process.
“The only conclusion which can be drawn from this sequence of events is that Oaktree had no serious interest in engaging in the Review Process and their course of action was solely driven by their short-term considerations.”
Earlier today, Oaktree called for the winding down of the fund, citing a number of concerns including RDL’s decreasing Net Asset Value (NAV), an ongoing legal case against Princeton, increased competition in the credit lending space, and a lack of confidence in the company’s ability to hit its return targets.
However, Ranger has pointed out that these issues were already being dealt with, and a full review will soon be published.
Ranger’s letter went on to criticise Oaktree for being driven by “short term interests” and pointed out that the investment manager raises concerns but “offers no detail on how those obligations would be met”.
“The Review Process has considered the possibility of a full or partial winding down of the Company’s activities and returning cash to shareholders,” said Ranger. “The Board has a duty to act in the interests of all shareholders and, therefore, must seek to achieve the best capital value for the Company’s assets and protect dividend flows.
“In the view of the Board, Oaktree’s approach will accomplish neither of those objectives and lead to an extended period of uncertainty for shareholders. In respect of capital value and dividend flows the Board reiterates its view that Oaktree’s approach is driven by its own short-term interests.”
Ranger revealed that during a dialogue with Oaktree on 23 April 2018, neither Oaktree nor its advisers were able to offer Ranger “any information of substance around a plan for dealing with the contractual rights of the shareholders”.
“It is essential to the future of Ranger as a successful public company to achieve sufficient consensus between the Board and shareholders on the Company’s future direction,” the letter continued. “To deliver this outcome requires a detailed and measured dialogue with shareholders.”
Ranger added that the board’s findings on the Review Process including manager selection and investment policy and the independent valuation of the portfolio (other than the Princeton assets) will be published shortly.
Oaktree recently revealed that it holds an 18.56 per cent stake in RDL, making it the fund’s second largest shareholder.