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Eurocastle Investment shareholder suggests selling doBank

In a letter addressed to the board of the Eurocastle Investment Ltd., EJF Debt Opportunities Master Fund LP, a 26.2% shareholder of the U.K.-based real estate company, suggested a change in its strategy and addition of new board members.

The shareholder called on the directors of the company to make an exit from doBank SpA, which represents 49% of the company's net asset value as of March 31. It argued that the company should not keep half of its NAV in a single, exchange-traded position, and if the shareholders wanted ownership of the bank, they could do so by way of purchasing its shares from the open market, as opposed to paying a fee through a manager to make the same investment.

The fund also highlighted how Eurocastle continued to trade at a discount to NAV, and suggested an open market buyback program to solve the problem.

The shareholder also expressed its concern regarding the approximately €135 million the company held in uninvested cash, deeming the amount excessive and proposing to distribute it to shareholders, while retaining appropriate levels for working capital.

Among further concerns, EJF asked the company to nominate two directors to the board by consulting with shareholders, including itself.

EJF Debt Opportunities Master Fund LP beneficially owns 13,798,647 shares of Eurocastle Investment Ltd., according to the letter.