Canyon Capital Advisors may be headed to a proxy fight with Wilmington-based loan servicing company Navient.
The New York activist investor this week withdrew a $3 billion “expression of interest” of Navient this week after the board rejected the offer.
Navient shares dropped below $12 a share, but recovered slightly after the news from Canyon. Canyon’s “expression” figure for acquiring Navient was only slightly above the company’s stock market price, Navient pointed out.
New York-basedCanyon now wants to put a minority slate of its nominees on the Navient board citing a disagreement over the company’s strategy.
The activist investor group said the board members “will bring a fresh perspective and oversight to Navient’s strategic direction, about which Canyon has significant concerns as a shareholder of over 10 percent of Navient’s outstanding common stock.”
According to a release, “Canyon believes that rather than focusing on managing the legacy assets that Navient inherited when it was spun off from Sallie Mae, Navient has used the cash flows from those assets to subsidize the acquisition of new, non-core businesses with uncertain growth and profitability prospects. In Canyon’s view, if expenses were appropriately allocated it would be evident that many of Navient’s businesses, other than the legacy assets, are unprofitable.”
Navient has been buying up companies as it diversifies beyond student loan servicing. One company manages parkingservices for government entities.
Canyon pushed back on media reports that it made an offer to acquire the company.
“…Canyon, a longstanding, significant shareholder of Navient, had been engaged with Navient over the past several months in a confidential and courteous process to explore a potential transaction. On February 15, Canyon provided an initial expression of interest at a level Canyon believed appropriate given the information it had and did not have. However, by letter and press release of February 17, Navient abruptly walked away from the parties’ discussions, indicated it was unwilling to provide additional information Canyon had requested to address its concerns, and declined Canyon’s request to extend the February 23 deadline for action at Navient’s upcoming annual meeting.”
Navient issued the following statement and acknowledged it has legal and financial advisors in place in light of Canyon’s actions:
“Navient is committed to maintaining a highly qualified, diverse and independent Board and to following good governance practices that create shareholder value and serve our customers, employees and communities. The Nominations and Governance Committee of our board will evaluate Canyon’s nominees and make a recommendation that is in the best interest of all shareholders. Navient shareholders do not need to take any action at this time.”
Navient noted that Morgan Stanley & Co. LLC is acting as financial advisor to Navient and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor.
Navient’s stock price has remained depressed after the spin-off from Stanton-Christiana based student lender Sallie Mae a few years ago.
The company has battled with regulators and faced lawsuits over its loan servicing practices.