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Morning Brief: Canyon Takes Activist Position in Navient Corp.

The multistrategy hedge fund firm plans to discuss potential board nominees with the student loan servicer.

  • By Stephen Taub

Canyon Capital Advisors is going activist on Navient Corporation, the servicer of student loans. In a new 13D filing, the credit-driven multistrategy firm said it boosted its stake in the company to 7.8 percent and plans to discuss potential board nominees in light of the company’s announcement earlier this week that one of its directors will not stand for re-election at its upcoming annual meeting.

In the regulatory filing, Canyon said it has from time to time discussed strategy, strategic transactions, operating performance, and corporate expenses with management and the board. In a statement, Navient said it “values” Canyon’s investment and interest in the company, adding, “We regularly have discussions with shareholders, and will engage with Canyon to discuss potential board nominees and to continue to learn more about their ideas toward our common goal of enhancing shareholder value.”

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Engaged Capital boosted its stake in Aratana Therapeutics to 5.2 percent and said it has nominated three individuals to the board of directors for the 2018 annual meeting. In a regulatory filing, the hedge fund headed by Glenn Welling asserted the shares of the animal therapeutics company are undervalued and represent an attractive investment opportunity and it plans to discuss ways to create stockholder value with management and the board. It also said it has no present proposal for the company.

In the past year or so, Engaged has been involved in activist campaigns with The Hain Celestial Group and Rent-A-Center. Welling founded Newport Beach, California-based Engaged in 2012 with an $85 million seed investment from Grosvenor Capital Management. The firm targets companies whose market capitalizations range between $500 million and $8 billion.

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Och-Ziff Capital Management Group announced it is issuing a $250 million senior secured term B loan facility. It plans to use the proceeds to repay $400 million of senior unsecured debt, which is scheduled to mature in November 2019.

In response, Fitch Ratings affirmed the long-term default ratings of Och-Ziff and related entities and revised its outlook to stable from negative, saying this reflects “Oz’s continued focus on strengthening its balance sheet.” Fitch also said the outlook revision reflects improved asset flows, maintenance of investment performance and fee generation, and a stabilizing expense base. “The rating affirmation reflects Oz’s franchise, long-term performance track record, particularly in its core multistrategy hedge fund business,” and its continued expansion into credit and real estate products, “which have longer lock-up periods and adequate core profitability metrics,” the rating agency added. It also stressed that the ratings incorporate the recent resignations of founder Daniel Och as CEO and independent board member William Barr from the board of directors earlier this year.

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