Following pressure from two of the trust’s biggest shareholders, the appointee manager recommended by the board, Ares Capital Management, took itself out of the running to revive the ailing trust.
The board is now pursuing a wind-down strategy, as recommended by Oaktree Capital and LIM Advisors.
Oaktree and LIM, who collectively own 29.4% of shares in Ranger Direct Lending, wrote to shareholders multiple times to convince them the appointment was not in their best interest and would make the fund riskier.
Ares said it would invest in structured credit products with embedded leverage and assets with longer maturities.
Both investors advocated winding-up the fund instead of taking on a manager that would dramatically alter the investment strategy and put further capital at risk.
“A sensible and responsible board should verify that the fund has a future before embarking on such an expensive and time-consuming course of action,” Nick Paris, director and portfolio manager at LIM, said at the time.
While Paris was “glad to see common sense has finally prevailed” with news the board will pursue a wind-down, he said the recent approach adopted by the board highlights Ranger’s weak corporate governance.
He said he was shocked that the Ares announcement was not also accompanied by a resignation by chairman Christopher Waldron.
“In our view, the existing board failed to properly supervise the management of the fund’s assets since launch, mishandled the strategic review and the decision to appoint Ares, repeatedly opposed the appointment of new non-executive directors and took an unacceptably aggressive approach to Ranger’s ZDP shareholders,” he said.
In a separate announcement, Oaktree also called for new independent oversight at the board and urged shareholders to support its two nominees Greg Share and Dominik Dolenec before the trust’s AGM.
“Oaktree believes that, now more than ever, new directors are needed to maximise shareholder value in the wind-down,” said Patrick McCaney, managing director and portfolio manager.
“Even the board has conceded that it will need to appoint additional independent non-executive directors to oversee the wind-down “following consultation with shareholders”.
“We urge the board to put the interest of shareholders first and do the right thing by immediately entering into discussion with Oaktree to add Oaktree’s nominees instead of continuing with a costly, distracting and misguided effort to block highly-qualified, shareholder-supported nominees.”
LIM is calling for shareholders to support Oaktree’s nominees and its own recommendations, Brendan Hawthorne and Eric Long.
The Ranger Direct Lending AGM will take place on 19 June.
