PhenixFIN Corporation (PFX)

[Enterprising Investor]

Glacier Point Advisors, LLC sends letter to Independent Directors (7/20/20)

July 20, 2020
Dear Independent Directors of Medley Capital Corporation

Glacier Point Advisors, LLC currently represents clients who hold in totality 11.06% of the common shares of Medley Capital Corporation (MCC). We are writing you to put forth a proposal to be included as part of the Boards Strategic Review process for MCC. This proposal is designed to maximize value for shareholders, and we believe the Board should evaluate this proposal against other proposals received through its strategic review process.

The primary objective of this proposal is increase MCCs Net Asset Value (NAV). The secondary objective is to narrow the gap between MCCs current market price of its common shares and its NAV. Given the current economic distress in the U.S. and specifically the BDC industry, the current environment does not in our view represent the most opportune time to consider a sale of the company or the investment management contract. We believe the company should forego the sale effort and focus on repurchasing stock and debt in a manner that would be accretive to MCC shareholders.

We recommend the company retain the investment management services of Medley Management (MDLY) in the form of a management contract under the following conditions:

1) Extend the current Expense Cap agreement with MDLY for an additional 12 months following expiration on 09/30/2020.
2) MDLY agrees that no new investments will be made during the contract period with exceptions granted to support existing portfolio companies with approval of Board.
3) All affiliate transactions must be pre-approved by the Board.
4) All proceeds from loan repayments/maturities will return as cash to the balance sheet in order to facilitate stock and bond buyback programs.
5) Sell portfolio assets to raise cash at or above cost or even below cost if there is an opportunity to purchase stock in the open market at substantial discounts (30% or greater) to NAV.
6) Announce a strategic plan to buyback as much as 40% of outstanding common shares at up to a 30% discount from most recent quarters NAV over contract period.
7) Reduce outstanding debt through open market purchases of 2023 maturity at a discount to par. Refinance all or a portion of upcoming 2021 debt maturity.
8) Propose an incentive payment plan to MDLY for successfully achieving a NAV in excess of $4.00 per share with the common shares trading at least 70% of prior quarters NAV by end of contract term.

In conjunction with my proposal, I am requesting 3 directorships to be added to MCCs Independent Board which include myself, Kevin McCallum and shareholders Howard Amster and Matthew Howlett.

Sincerely,

Kevin M. McCallum
Registered Investment Advisor
Glacier Point Advisors, LLC

https://www.sec.gov/Archives/edgar/data/1490349/000108514620001824/mccainitial_72020.htm