OAKTREE Capital Management has asked the board of Ranger Direct Lending (RDL) to allow all shareholders to vote on the future of the fund.
Days after calling for RDL to be wound down, Oaktree has urged the investment trust to hold a full shareholder vote to determine whether or not the fund should close, stating that recent events have left Ranger at a “critical juncture”.
“Ranger is at a critical juncture and facing major decisions that will impact future shareholder value,” wrote Patrick M. McCaney, managing director and portfolio manager for value equities at Oaktree Capital Management. “For this reason, we believe it is imperative that the board give all shareholders a voice in these decisions through a full shareholder vote.
“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.
“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,” McCaney added in the letter. “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.”
On 24 April, Oaktree made public a letter to the RDL board in which it recommended the closure of the fund. This followed several months of losses, largely pegged to RDL’s ongoing legal battle with Princeton. Within hours of the letter being released, RDL’s board of directors responded, rejecting Oaktree’s recommendation and stating that Oaktree’s course of action was “solely driven by their short-term considerations.”
RDL went on to reassure its shareholders that it would soon be releasing the board’s findings on a recent review process which will cover manager selection, investment policy and the independent valuation of the portfolio. However, Oaktree has warned that any changes to the fund’s management would “raise significant governance questions”.
“We believe it would raise significant governance questions if the board were to adopt a new long-term investment management arrangement – thereby locking in new fees and potentially risking disruption to the existing portfolio – without allowing all shareholders a voice on the matter in an open and transparent way,” added McCaney in the latest open letter to Ranger.
Oaktree recently revealed that it holds an 18.56 per cent stake in RDL, making it the fund’s second largest shareholder after Invesco, which holds a 27.7 per cent stake, according to Bloomberg. Other shareholders include Lim Advisors (9.2 per cent), Credit Suisse (9.2 per cent) and City Financial (6.7 per cent).
An RDL representative said that the company was unable to comment on the latest Oaktree letter at this stage.
The investment trust is currently trading at a discount to net asset value of 14.7 per cent.