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Canyon Capital Is Starting a Boardroom Fight at Navient Corp.

Canyon is proceeding after negotiations to refresh the company’s board failed to progress, sources said.

Canyon Capital Is Starting a Boardroom Fight at Navient Corp.
An artwork depicting the footballer Pele hangs on the wall near the boardroom of a company at Charterhouse Street in London, U.K. (Photographer: Simon Dawson/Bloomberg)

(Bloomberg) -- Canyon Capital Advisors LLC formally launched a boardroom battle at Navient Corp. Thursday in an effort to boost the student-loan servicer’s shareholder returns.

The alternative asset manager, which owns 10.5 percent of Navient, will move forward with plans to seek four director seats, according to a regulatory filing Thursday.

Canyon is proceeding after negotiations to refresh the company’s board failed to progress, according to people familiar with the matter, who asked not to be identified because the matter isn’t public.

Navient has been mismanaged and requires new leadership to improve its performance, Canyon said in the filing. The company’s total shareholder return has been a negative 14 percent since spinning off from SLM Corp. in 2014, Canyon said.

"Despite this extraordinarily disappointing performance, the board failed to take steps that we believe could have arrested the underperformance," Canyon said.

Navient rose 1.9 percent to $12.21 on Thursday, giving the Wilmington, Delaware-based company a market value of about $3 billion. Its shares gained as much as 2.3 percent after markets closed.

A representative for Navient declined to comment.

Canyon said in February that it would nominate four directors to Navient’s board after abandoning a takeover approach. The firm said at the time that it was concerned about how the company had been using cash flow for acquisitions instead of returning capital to shareholders.

Navient said it would review Canyon’s nominees but discussions have stalled, the people said.

Launching a proxy fight is unusual for Canyon, which prefers to work with companies behind the scenes. In 2016, it launched a battle for board seats at Ambac Financial Group Inc. before walking away days before shareholders were to vote at its annual meeting.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Matthew Monks, Michael Hytha

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