Is there any indication that RiverNorth Capital has given up on its attempt to restructure FSC?
I ask that because the price of FSAM stock has also taken a beating today, which is what you would expect if people thought that FSC was going to fire FSAM.
Note that FSAM is continuing to get crushed. Closing price of $1.75, down almost 90 percent from ipo price of $17, on very heavy volume, considering there are only about 6M shares outstanding.
Note carefully that the price of FSAM has been devastated. It closed today at $2/share, a drop of close to 88% in only 15 months from the ipo price of $17/share. It looks like more and more people believe that the shareholders of FSC are going to say bye bye to FSAM at the next annual meeting.
If FSAM wants to cut a deal, they will have to cut their management fees significantly. This does not mean the dividend will go up. My guess is that the company will transition to very low risk investments instead. Also, the composition of the board of directors will change significantly.
By the way, I do not believe there will be a deal. First, I think that RiverNorth Capital will definitely try to get rid of FSAM. Second, the lawsuits will proceed if FSAM remains in control. Third, lawsuits directly against FSAM are very likely given the drop in price from $17/share at the ipo to $3 now.
Here is how it will probably work out: FSAM goes out the door! FSC is iquidated at net asset value or close to that. A small part of the proceeds go to the plaintiffs who filed suit against FSC/FSAM in U.S. District Court, and the rest is divided up among the shareholders
I do think that the lower FSC goes, the more likely it is that the shareholders will kick out FSAM as the investment advisor. The same is true, of course, for FSFR as well.
Note carefully that the price of FSAM has declined from $17/share 14 months ago to $3/share today.
(By the way, I regard a lawsuit against FSAM as a certainty now, given the 80+ percent decline in the share price.)
Does everybody understand that it is almost impossible to remove REXI as the external manager of RSO?
The reason is that a huge severance payment must be made to REXI no matter what, with only a few exceptions. As it happens I have brought this to the attention of 2 lawyers in the past couple days, but have not heard back from any of them.
This company is as bad as Fifth Street Finance. At least with Fifth Street Finance, the shareholders can get rid of the investment adviser directly; they do not have to go through the Board of Directors to accomplish this.