Medallion Financial responds to ZimCal proxy contest allegations

Medallion Financial Corp. (NASDAQ: MFIN) issued a response to claims made by Stephen Hodges and his affiliates, collectively known as ZimCal, in their third consecutive proxy contest against the company. The annual shareholder meeting is scheduled for June 9.

Medallion stated that Hodges primarily holds illiquid trust preferred securities purchased at a discount in 2021, which currently pay 6% and do not participate in equity upside. The company said Hodges has sought a debt buyout at approximately 45 cents on the dollar, or $6.5 million, for three years.

According to Medallion, Hodges acquired 99.4% of his current 2.1% stake this year, with only 0.8% acquired before the record date. The company noted that after losing the 2024 proxy contest by a 3.5 to 1 margin, Hodges liquidated nearly his entire 70,000-share position.

Medallion reported net income of $266 million over the past five years and book value per share growth of 53% since 2021. The company said its quarterly dividend has increased 75% since 2022 and it has returned over $68.5 million to shareholders through dividends and buybacks since 2022.

The company challenged ZimCal's nominees, particularly Eric Kelly, citing his tenure as CEO of Sphere 3D Corporation where total shareholder return declined 99%. Medallion noted Kelly faces a pending lawsuit scheduled for trial in December 2026, with allegations including revenue diversion and financial improprieties.

Medallion addressed an SBA technical default matter, stating it was not a financial default and has received positive feedback from the SBA regarding the cure. The company also referenced a resolved SEC matter from 2014-2017 where no wrongdoing was admitted.

The company urged shareholders to vote for its nominees using the white proxy card.

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