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HomeBank CapitalWho Will Determine Nam Tai Property’s Fate?

Who Will Determine Nam Tai Property’s Fate?

  • Nam Tai Property Inc.’s April 26 special meeting to consider new directors has been postponed by a Caribbean court

  • Dissident IsZo Capital Management LP recently raised its stake to 14%

  • Nam Tai says funding remains in flux following demand letters, account freezing by Chinese banks

  • IsZo says it prefers to keep bank loans, but has “strong relationships with alternative financing sources”

  • Finance attorneys familiar with Chinese regulations and not involved with the situation told CorpGov that loans could be challenging to replace

  • Billionaire board director and 19% Nam Tai shareholder Peter Kellogg supported special meeting

  • ISS recommends to vote for three of IsZo’s six nominees

By John Jannarone

It’s not your everyday proxy fight. With a cast of characters including 78-year-old billionaire Peter Kellogg, a British Virgin Islands judge, and a throng of Chinese banks holding the purse strings, it sounds more like the script for an international thriller.

Meet Nam Tai Property Inc. (NYSE: NTP), a real estate outfit with a headquarters in Shenzhen, China, a corporate registration in the British Virgin Islands, and shares that trade in New York. The company, whose market capitalization is about $430 million, has come under pressure from New York-based investment firm IsZo Capital Management LP, which is frustrated with the company’s leadership and has nominated six directors to the board. The showdown was expected to reach a climax at a special meeting on April 26, but that has just been delayed by a Caribbean court, setting the stage for more possible drama.

The action first heated up last year, when IsZo, now the largest independent shareholder with 14% of shares outstanding, initially requested a special meeting. Chief among IsZo’s gripes was that developer Kaisa Group Holdings Ltd. (HKG: 1638), which currently owns 24% of the company and replaced the CEO in 2017, was hurting other shareholders. In an interview with CorpGov, IsZo cited a poor stock performance – negative 57% – in the two-and-a-half years between the day Kaisa’s appointee became CEO and the activist went public with its campaign last May.

Soon after, trouble allegedly began to brew in China with Nam Tai’s mainland banks. According to the company, all of its lending banks were alarmed by the proposed removal of every director but two. One of those directors is Peter Kellogg, a 78-year-old billionaire who sold the eponymous securities clearing and execution firm Spear, Leeds & Kellogg to Goldman Sachs in 2000. The second is Mark Waslen, a former employee who has been a director since 2003.

Nam Tai said its lending banks notified it that “substantial uncertainties would be cast upon the Company’s operations and management control in light of recent actions taken by IsZo and reserved their rights to withdraw their banking facilities.” In one case, Nam Tai in fact repaid $30 million at the demand of a bank, the company said.

The banks include state-owned…

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