User-Friendly Phone Book, LLC Reiterates Its Opposition to the Proposed Transaction Between Rand Capital Corp. (NASDAQ:RAND) ...
April 10 2019 - 8:30AM
Business Wire
User-Friendly Phone Book, LLC (“User-Friendly”), the largest
stockholder of Rand Capital Corporation (the “Company” or “Rand”)
(NASDAQ:RAND), announced today that it continues to oppose the
proposed transaction between Rand and East Asset Management, LLC
(“East”) that was announced on January 25, 2019. In a letter to the
Company’s Board of Directors on March 27, 2019, User-Friendly
detailed the reasons for its opposition, which are highlighted
below. To date, User-Friendly has not received a response to its
letter from the Board of Directors.
User-Friendly intends to vote AGAINST the proposed transaction for the following
reasons:
- the $3.00 per share acquisition
price is inadequate and represents an approximate 40% discount to
the Company’s NAV per share of $4.99 as of December 31,
2018;
- in a transaction in which the
Company is selling a 57% controlling interest, the Company should
receive a premium for its shares, not an approximate 40% discount
to NAV per share;
- current Rand shareholders will
suffer substantial dilution as a result of the sale of shares at a
price that is below the Company’s current NAV and as a result of a
planned Special Dividend of which East will be entitled to receive
57%;
- the financial analyses performed by
the Company’s financial advisor were premised on outdated financial
information which lead to an undervaluing of the Company’s NAV per
share and skews the Adviser’s conclusion on which the Board
relied;
- the Adviser’s fee structure under
the proposed Investment Management Agreement, including the
incentive fee of 20% of the Company’s net capital gains and 20% of
the Company’s cumulative net return in excess of 8.75%, creates
serious conflicts and misaligns the interest of the Adviser and the
Company’s shareholders, and the incentive fees are substantially
dilutive to current shareholders’ up-side participation in any of
the Company’s investment returns;
- there is no credible support that
the value of the assets to be contributed by East, which comprise
52.4% of the aggregate consideration to be received by the Company
in the proposed transaction, has been accurately measured;
- East is incentivized to over-value
the assets to be contributed, and the Company has failed to provide
adequate information regarding the nature of these contributed
assets or the process by which the Company and East have agreed on
their value;
- there is no assurance that the
Company will declare the Special Dividend or any other dividends in
the future; and
- the $750,000 termination fee payable
by the Company if the proposed transaction were not to be
consummated, and the $500,000 fee payable to the Company’s
financial advisor are excessive and potentially debilitating to the
Company and its shareholders.
Without the Company or the Board of Directors seeking to address
any of User-Friendly’s concerns, User-Friendly feels constrained to
oppose the transaction, and intends to vote AGAINST the proposed transaction.
About User-Friendly Phone Book
Operating since 1999, User Friendly Media boasts a portfolio of
print, digital and mobile marketing solutions for small business.
The company’s product suite includes 35 print directories, User
Friendly Apps, a mobile app builder, User Friendly Mobile ads, a
platform for serving locally-targeted mobile ad impressions and
GoLocal247.com, one of the fastest growing local business directory
websites in the country.
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version on businesswire.com: https://www.businesswire.com/news/home/20190410005188/en/
Matthew BretziusFischTank Marketing and
PRmatt@fischtankpr.com
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