POTENTIAL TAX CONSEQUENCES
:
there is no assurance that Rand will declare the Special
Dividend (or any cash dividends going forward), and if it does declare the Special Dividend, the Special Dividend may not include sufficient cash to provide shareholders with the ability to fully satisfy the resulting tax obligation.
CONFLICTS OF INTEREST
:
the Advisers fee structure under the proposed Investment Management Agreement misaligns the interests of the
Adviser and the Companys shareholders.
QUESTIONABLE VALUATIONS
:
there is no credible support that the value of the assets to
be contributed by East (the Contributed Assets), which comprise 52.4% of the aggregate consideration to be received by Rand, have been accurately measured.
Please remember, you are not getting paid anything for your shares if the transaction is
approved, but you will be selling control of the Company.
INADEQUATE PRICE
The acquisition
price of $3.00 per share represents an approximately 41% discount to Rands NAV of $5.06 per share as of March 31, 2019. In a transaction where East will be acquiring a controlling interest, we believe Rand should be commanding a
premium
for its shares, not giving them away for a 41% discount!
In the Definitive Proxy Statement
filed by Rand on April 18, 2019 (the Proxy Statement), Rand management has taken great pains to argue that it is receiving income-producing assets at an acceptable price, but ignores the question on which we are actually voting:
control of Rand AND fair compensation to its shareholders
.
If the proposed transaction is approved, East will own approximately 57% of
Rand, with its stake possibly to increase with any dividend that is declared in the future. As of March 31, 2019, Rands NAV per share increased to $5.06 per share.
The $3.00 per share purchase price that East will be paying for its
controlling stake in your company is now an approximately 41% discount to Rands most recently reported NAV per share!
User-Friendly
believes that East is providing extremely inadequate financial consideration to you and all shareholders in return for depriving us of the benefit of this increase in Rands NAV and stripping away control for inadequate compensation.
GREATER RETURN UPON LIQUIDATION
Simply liquidating Rands portfolio would net shareholders an approximately 69% larger return than the proposed transaction with East.
As of March 31, 2019, the fair value of Rands total assets was $32.5 million with net assets of $32.0 million. By simply undertaking an
orderly and methodical liquidation of Rands asset portfolio, Rand shareholders would receive approximately $5.06 per share, which represents $2.06 or 69% more than the $3.00 per share offered by the proposed transaction with East.
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