Oaktree guns for Ranger Direct Leasing Fund board in open letter

Oaktree Capital Management, a 19% shareholder of Ranger Direct Lending Fund, released another open letter to Ranger shareholders on Friday, saying the board’s latest response to its open letter on 6 June raised “a number of troubling questions”, which it urged the board to answer without delay.

The firm alleged the board was “selectively engaging” with only a minority of shareholders about the future of the company, and disadvantaging others with dissenting views.

It said the Ranger board inaccurately claimed that Oaktree declined to participate in the review process, while “independent directors and their advisers continue to be in positive discussions with shareholders on the Ares proposal and related matter”.

“In reality, the board and its advisor, Kinmont, repeatedly sidelined and delayed Oaktree’s ability to participate in the process alongside other shareholders, culminating in their giving us a direct ultimatum that we could only have a meeting with Ares if we agreed in advance to support their desired outcome,” Oaktree wrote.

“Since the beginning, Oaktree has advocated considering all strategic alternatives and has continually called on the board to conduct an open and fair strategic review process.”

Oaktree said it remained “open and ready” to meet with Ares to hear how they planned to address its concerns, if the Ranger board offered a meeting without “self-serving” preconditions.

“However, despite our extensive attempts to engage constructively with the board, it has chosen to engage solely with a minority of Ranger shareholders supportive of its views on the direction of the company.

“We also continue to question the board’s statement that it has the support of 39% of shareholders on its recommendation to appoint Ares as the new investment manager, considering that to date based on our own stakeholder conversations we believe that a significant majority of shareholders share our concerns about the current board’s stewardship.”

Oaktree also said it considered that the board’s failure to “meaningfully engage” with itself and other shareholders who had expressed dissenting views brought into question the independence of the current directors and the board’s relationship with Kinmont.

“In the spirit of transparency, we call on the board to publicly disclose the following with utmost urgency,” it said, asking what dealings and discussions had each director had in recent years with Ares and its affiliates outside of Ranger.

It also questioned whether the board’s key advisor Kinmont was misaligned with shareholders, due to what it alleged was compensation primarily based on placing a new manager, and not based on maximising shareholder value.

“The latest letter is a clear admission on the part of the board that the Ares proposal is not yet ready to be voted on by shareholders despite being promised ‘as soon as possible’ on 1 May, and later on 16 May, ‘with the intention, if possible, of calling a general meeting on the same date as is proposed for the company's AGM’,” Oaktree continued.

“In fact, the board continues to refer to an Ares-focused GM circular, but shareholders have yet to see this circular, suggesting that, once again, the board is opting for gamesmanship and is not going to give shareholders the opportunity to vote on the Ares proposal on 19 June.”

Oaktree said it found that “alarming”, and it “strongly” urged the board to “fulfill its commitments and fiduciary responsibilities” by ensuring all shareholders had a vote on the decision as soon as possible.

“Oaktree strongly believes this board has demonstrated that it is not fit for purpose at such a critical moment in the company’s history.

“In our view, the board’s weaknesses can only be resolved by adding to the board and introducing improved oversight, a broader range of views and deeper relevant experience at this important time for the company.”

Oaktree said its nominees, Greg Share and Dominik Dolenec, had more than 40 years of combined experience that would “strengthen” the board.

It said its nominees were committed to representing the “best interests” of all shareholders and driving value, with their interests said to be “fully aligned” with those of all Ranger Direct Lending Fund shareholders.

“We urge shareholders to act now to maximise the value of their investment – vote for resolutions eight and nine for our highly qualified nominees Greg Share and Dominik Dolenec, who will be committed to driving value for all shareholders, to be appointed to the board,” Oaktree asserted.

“The annual general meeting takes place on 19 June, and it is important to vote on or before 15 June 15 to have your voice heard.”