Rand Capital Corporation · NASDAQ:RAND
Rand Capital — Proxy Contest (April 2019)
11 slides from Rand Capital's proxy contest presentation, Apr 26, 2019
Slide 1: Opposition to Rand Capital Corporation Proposed Transaction with East Asset Management
User-Friendly Phone Book, LLC Opposition to Rand Capital Corporation (NASDAQ:RAND) Proposed Transaction with East Asset Management, LLC ISS Review | April 26, 2019 Exhibit 1
Slide 2: Summary
Summary 2 User-Friendly does not believe Rand shareholders are being adequately compensated for sale of two important assets: Control and Management Vehicle Control is being sold at a 40% discount to Net Asset Value (NAV) Externalizing manager “gives” away value to be built up by separate manager ve
Slide 3: Who We Are – User Friendly Phone Book
Began operations in 1999 America’s second largest independent print directory 35 books across the United States including California, Kansas, Kentucky, Ohio, Oklahoma, and Texas Over 16,000 small business clients Comprehensive suite of print and digital marketing products including print directories
Slide 4: User-Friendly is the largest shareholder of Rand Capital Corporation
User-Friendly Phone Book, LLC (User-Friendly) is the largest shareholder of Rand Capital Corporation (Rand) Owning Approximately 23% of the Outstanding Shares, Purchased at Approximately $3.00/share User-Friendly had discussions with Rand management over several months covering general business stra
Slide 5: Rand to Sell Control for 40% Discount to Net Asset Value
Rand to Sell Control for 40% Discount to Net Asset Value 5 Rand states that the deal price of $3.00/share is a 33% premium over the stock price one day prior to deal announcement; although factual, not representative Very thinly traded stock. Average daily trading volume over the past year was 13,64
Slide 6: Rand to Sell Control for 40% Discount to Net Asset Value
Rand to Sell Control for 40% Discount to Net Asset Value 6 Management attempts to justify the price with the fairness opinion of Keefe, Bruyette & Woods, Inc. (KBW) KBW ignored the fact that a control transaction should command a premium over NAV, not a steep discount to it The KBW opinion was based
Slide 7: Stock dividend from RIC will be immediately taxable income to shareholders
Stock dividend from Registered Investment Company (RIC) will be immediately taxable income to shareholders further diluting any returns from ownership of Rand stock Rand is planning to elect conversion to become a registered investment company (RIC) after deal is closed and issue required 90% divide
Slide 8: Poor Performing Managers Will Move to New External Advisor Group
Poor Performing Managers Will Move to New External Advisor Group 8 Rand will externalize management of company by executing an Investment Management Agreement with a newly formed investment adviser owned by East. Proxy states one of the reasons for externalization is to gain “expertise” of advisers
Slide 9: Current Management and Board are Ineffective and Should Be Replaced
Current Management and Board are Ineffective and Should Be Replaced 9 Current management is ineffective even with long tenure, CEO 23 years, CFO 22 years Net assets and NAV/share have remained relatively flat from 2014 to 2018 Ratio of EOY share price to NAV/share has dropped from 80% in 2014 to 50%
Slide 10: Better Ways To Increase Current Shareholder Value
Better Ways To Increase Current Shareholder Value Total investments at fair value December 31, 2018 is $34.6 million Liabilities in excess of other assets $3.1 million for NAV of $31.5 million Current market cap at $3.00/share equal to approximately $19.0 million Current Gap from market cap to NAV i
Slide 11: Certain Information Concerning the Participant
CERTAIN INFORMATION CONCERNING THE PARTICIPANT User-Friendly Phone Book, LLC (“UFPB”) is the sole participant in this solicitation. UFPB plans on making a filing with the Securities and Exchange Commission (“SEC”) consisting of a proxy statement and accompanying WHITE proxy card to be used to solici