Medallion agrees to repurchase $15.0 million in securities, settle shareholder dispute
Key Facts
Medallion Financial announced an agreement to repurchase trust preferred securities with a liquidation value of $15.0 million as part of a settlement with investors that includes restrictions on their activities involving the company. The company said in its transaction announcement that the purchase price represents 73.66% of the face value of the securities it is buying from the Bemezci Fund. The agreed consideration is $11.049 million, plus distributions accrued through the repurchase date, according to Medallion's statement. The securities covered by the agreement were issued by Medallion Financing Trust I, according to the filing with the U.S. Securities and Exchange Commission. The purchase and settlement agreement with the Bemezci Fund and ZimCal Asset Management was signed on October 16, 2026. Medallion said it would record a repurchase gain in the fourth quarter of 2026 representing the difference between the securities' carrying value and their acquisition cost.
The settlement includes restrictions on the investors' activities involving Medallion through October 16, 2031, according to details of the agreement in the company's SEC filing. Activities covered by the restrictions include proxy contests, subject to exceptions specified in the agreement. The restrictions also extend to purchases of the company's securities, voting rights or debt, under provisions governing the investors' actions during the agreed period. They also cover proposals for transactions involving the company, another aspect of the obligations accompanying the purchase of the preferred securities from the fund. On litigation, both sides agree during the restricted period to refrain from bringing, threatening or supporting lawsuits against the other party. These litigation obligations are also subject to specified exceptions, according to the purchase and settlement agreement disclosed by Medallion.
The agreement also includes a mutual non-disparagement commitment lasting until October 16, 2028, according to the SEC filing. The commitment covers refraining from making disparaging or knowingly false statements, subject to exceptions stipulated in the agreement between the parties. The investors also agree to dispose of all Medallion securities they beneficially own, including common shares, by December 31, 2026. The settlement follows an election contest at the company's annual meeting, addressed in Medallion's announcement of preliminary voting results for that meeting. The company said in the announcement that shareholders "re-elected the company's three board nominees," according to the preliminary results announced. Shareholders, meanwhile, rejected the nominees of the party affiliated with ZimCal, according to the same company voting announcement.
On its business, Medallion's management placed the agreement in the context of the company's shift to diversified specialty finance, according to the transaction announcement. Management said net assets related to taxi medallion financing had fallen to 0.1% of the company's total assets. In its previously reported results for the second quarter of 2026, Medallion announced net income attributable to shareholders of $7.4 million, according to its earnings statement. Net income attributable to shareholders in the corresponding period of 2025 was about $11.1 million, according to the company's comparison. On a per-share basis, Medallion reported earnings of $0.31 in the second quarter of 2026, according to the same statement. Earnings per share in the second quarter of the previous year were $0.46, marking declines in both total earnings and earnings per share.
On lending revenue, Medallion's net interest income rose during the second quarter of 2026, according to the company's earnings statement for that period. Net interest income totaled $57.2 million, compared with $53.4 million in the second quarter of 2025, according to figures announced by Medallion. The item increased year on year as net income attributable to shareholders declined between the two periods. In explaining higher credit provisions, management pointed in the earnings statement to growth in the company's loan portfolio. Management also linked higher provisions to requirements to establish reserves when originating new loans, as part of its explanation of second-quarter performance. The company described this aspect of the requirements as "upfront reserve requirements" in its comments on the impact of new loan originations on provisions.
The next financial reporting milestone will be results for the third quarter of 2026, according to Medallion's published schedule for releasing and discussing its results. The company set October 29, 2026, as the date for announcing those results, according to its scheduling statement. The announcement will be issued after the market closes that day, according to the timing provided in the statement. Medallion will hold a call to discuss third-quarter results the following day, October 30, 2026. The earnings call is scheduled to begin at 9:00 a.m. U.S. Eastern Time, according to the company's announcement.