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LOS ANGELES - Source Capital (NYSE: SOR), a closed-end investment fund with a market capitalization of $349 million and an impressive dividend yield of 12.12%, expressed its continued interest in pursuing a merger with 180 Degree Capital Corp. (NASDAQ: TURN), despite TURN’s swift rejection of its initial proposal. According to InvestingPro data, Source Capital maintains a strong financial health score of 3.3, rated as "GREAT." The proposal, which was dismissed by TURN’s Board of Directors within three business days, was made without any subsequent discussions between the two parties. Source Capital remains hopeful for a constructive dialogue that could lead to a mutually beneficial agreement for all TURN shareholders.
The response to Source Capital’s overture was met with a favorable reaction from the market, and at least one major TURN shareholder has publicly encouraged TURN to consider engaging with Source Capital. Source Capital’s strong fundamentals, including a P/E ratio of 6.91 and a 54-year track record of consecutive dividend payments, make it an attractive merger partner. Want deeper insights? InvestingPro subscribers have access to dozens more key metrics and analysis tools. Source Capital’s management believes that a merger could maximize shareholder value and is committed to exploring this possibility further.
In the event of a successful negotiation, Source Capital plans to file a joint proxy statement/prospectus with the Securities and Exchange Commission (SEC), which would serve as both a proxy statement for TURN and a registration statement for Source. This document would provide crucial information about the proposed merger and related matters to TURN’s shareholders.
The press release includes a disclaimer regarding forward-looking statements, indicating that actual future results or events could differ significantly from those currently anticipated. It also notes that the information has been prepared from reliable public sources and that there is no obligation to update forward-looking statements based on new information or future events.
Investors and TURN shareholders are advised to read any future filings, including the potential joint proxy statement, carefully for important details about the proposed transaction. With Source Capital’s beta of 0.64 indicating relatively low price volatility, and a strong current ratio of 3.81 demonstrating solid financial stability, the proposed merger warrants careful consideration. These documents will be available free of charge on the SEC’s website or upon request from the indicated sources.
This news article is based on a press release statement from Source Capital.
In other recent news, Source Capital, managed by First Pacific Advisors, LP, has reported that its Discount Management Program (DMP) saw the fund’s shares trading at an average discount to net asset value (NAV) of less than 10% throughout 2024. The discount even narrowed to less than 1% on the last day of the year, a feat not achieved since 2008. This development negates the need for a planned tender offer for 2024 under the DMP.
The company’s Board of Trustees has extended the DMP through December 31, 2026, with a similar contingent tender offer approved for the calendar year 2026. This offer, if triggered, would involve 10% of the fund’s outstanding shares at 98% of NAV per share.
On another note, Source Capital’s portfolio managers, officers, and Board have indicated they will not tender their shares if a tender is triggered for 2025 or 2026. The fund will continue its Stock Repurchase Program, targeting value-enhancing prices for shareholders.
In terms of portfolio allocation, the company has been progressively increasing its private credit investments, which constituted approximately 15.5% of the fund’s NAV as of January 14, 2025. More details about these recent developments will be discussed in an investor call scheduled for February 25, 2025.
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