Sunset Financial (NYSE:SFO)
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A group led by Western Investment Hedged Partners LP has
filed a preliminary proxy statement in opposition to the proposed
merger of Sunset Financial Resources, Inc. (NYSE: SFO) with Alesco
Financial Trust. The Western group will solicit the votes of Sunset's
stockholders against the proposed merger. Sunset and Alesco announced
that they had signed a merger agreement on April 27, 2006.
The Western group, which owns 1,022,300, or approximately 9.7%, of
Sunset's outstanding shares, also announced that it intends to
nominate directors for election to the Sunset Board at Sunset's 2006
annual meeting of stockholders.
As more fully described in its preliminary proxy materials, the
Western group believes that the Alesco merger should be rejected
because, among other things, the Western group believes:
-- The proposed exchange ratio of 1.26 Sunset shares for each
Alesco share is highly dilutive and unfair to Sunset's
stockholders.
-- Sunset has potentially more favorable alternatives than the
proposed merger, including remaining a standalone company.
-- The estimated transaction costs in the merger transaction of
approximately $9 million are excessive.
-- The proposed merger represents a fundamental change in
investment strategy that has not been justified to
stockholders. We believe this change in strategy and merger
involve substantial credit and other risks, and that it is the
wrong time in the business cycle to be taking these
significant risks.
Speaking on behalf of the Western group, Art Lipson said, "We
believe that the proposed merger is not in the best interests of
Sunset's stockholders. We have confidence in Sunset, and believe the
right management and board will be able to maximize value for all of
Sunset's stockholders. We intend to nominate directors for election to
the Sunset Board, which will give Sunset's stockholders the
opportunity to elect a new, highly qualified board of directors whose
interests are aligned with stockholders and who are committed to
maximizing stockholder value. We call upon Sunset to hold its 2006
annual meeting of stockholders, which we believe is long overdue,
concurrently with the special meeting currently planned to vote upon
the merger proposals, and to permit the election of directors at that
meeting."
The Western group urges all Sunset stockholders to demonstrate
their opposition to the proposed merger by promptly voting the GREEN
proxy card as soon as it becomes available.
The Western group has retained Innisfree M&A Incorporated to
assist with the solicitation of proxies. Stockholders can call
Innisfree M&A Incorporated toll-free at (888) 750-5834 with questions
or assistance in voting their shares.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
On June 30, 2006, Western Investment Hedged Partners LP, together
with the other Participants (as defined below), made a preliminary
filing with the Securities and Exchange Commission (the "SEC") of a
proxy statement and accompanying proxy card to be used to solicit
votes against proposals related to a proposed merger involving Sunset
Financial Resources, Inc. (the "Company") and Alesco Financial Trust
to be submitted to a vote of the stockholders of the Company at a
special meeting of stockholders to be called by the Company (the
"Special Meeting"). The Western group expects to prepare and file a
definitive proxy statement in connection with the Special Meeting.
THE WESTERN GROUP STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY
TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME
AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION. SUCH PROXY
MATERIALS ARE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT
HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE SOLICITATION
WILL PROVIDE COPIES OF DEFINITIVE PROXY MATERIALS, WITHOUT CHARGE,
UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE
PARTICIPANTS' PROXY SOLICITOR, INNISFREE M&A INCORPORATED, AT ITS
TOLL-FREE NUMBER: (888) 750-5834.
THE PARTICIPANTS IN THE SOLICITATION ARE WESTERN INVESTMENT HEDGED
PARTNERS LP, WESTERN INVESTMENT LLC, WESTERN INVESTMENT INSTITUTIONAL
PARTNERS LLC, WESTERN INVESTMENT ACTIVISM PARTNERS LLC, ARTHUR D.
LIPSON, MATTHEW S. CROUSE, JAMES S. SCHALLHEIM, D. JAMES DARAS,
MARSHALL W. COBURN AND GERALD HELLERMAN (THE "PARTICIPANTS").
INFORMATION REGARDING THE PARTICIPANTS AND THEIR DIRECT OR INDIRECT
INTERESTS IS AVAILABLE IN THEIR PRELIMINARY PROXY STATEMENT FILED WITH
THE SEC ON JUNE 30, 2006.