Investor Group Files Anti-Merger Proxy

A group led by Western Investment Hedged Partners LP, Salt Lake City, has reported filing a preliminary proxy statement in opposition to the proposed merger of Alesco Financial Trust, a Philadelphia-based real estate investment trust, with Sunset Financial Resources, a Jacksonville, Fla.-based REIT.Western said the group will solicit the votes of Sunset's stockholders against the proposed merger, which was announced in April. The Western group, which owns approximately 9.7% of Sunset's outstanding shares, said the proposed exchange ratio of 1.26 Sunset shares per Alesco share is "highly dilutive and unfair to Sunset's stockholders." The group also contends that Sunset has better options than the proposed merger (including remaining a standalone company), that the estimated transaction costs are excessive, and that the merger "represents a fundamental change in investment strategy that has not been justified to stockholders." The REITs said in April that the merged company would pursue Alesco's strategy of focusing on trust preferred securities issued by banks and insurance companies, middle-market loans, and residential mortgage-backed securities.