SUBSTANTIAL DILUTION
:
current shareholders investment in Rand will be diluted by
approximately 24% as a result of the East transaction, reducing the NAV per share by $1.24 to $3.82 per share. At the same time, East will see the NAV of their investment increase 82 cents per share, or 27%. This significant transfer of wealth from
current shareholders to East has been approved by Rand management.
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.
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