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Despite investor concerns about Xinhua Finance Media Ltd.'s corporate governance record and ties to the Chinese government, dealmaker Ron Burkle has targeted the firm. One of Burkle’s investment vehicles, Yucaipa Global Partnership Fund LP, reported Tuesday that it owned a 6.2% Xinhua Finance stake. In the filing, Yucaipa reported that the company’s shares are undervalued by the market and the company’s recent appointment of an independent director represents a strong step toward improved shareholder value.
“[Yucaipa Global Partnership Fund] believes that the addition of David Olson to the board as an independent director is a strong positive development,” the fund said in a Securities and Exchange Commission filing reported on Tuesday. “In addition, the company should have substantial opportunities for future growth.” Xinhua Finance Ltd. of Hong Kong, Xinhua Finance Media’s parent company, agreed Oct. 5 to sell its proxy advisory division, Glass, Lewis & Co. LCC to the Ontario Teachers' Pension Plan of Toronto for $46 million after the division became embroiled in controversy earlier this year. Xinhua Finance decided to auction the division after key Glass Lewis employees chose to leave the business earlier this year after complaining that the proxy advisory company did not disclose in a timely manner that Xinhua had bought a stake in the company in 2006. Burkle’s investment fund reported buying the Xinhua shares on Sept. 28, a day after Olson, an employee of a company related to Yucaipa, was appointed to Xinhua’s board. According to the filing, Yucaipa may discuss the investment with other shareholders, industry officials or others. However, investors don't share Burkle’s confidence in the company’s revised governance structure because Xinhua Finance Media shares dropped from $9.29 a share to $8.99 a share in trading Tuesday. The media company’s IPO priced in March at $13 a share. — Ron Orol See SEC filing Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World. Categories Deal Video
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