What contingency plans should be considered if the merger is ultimately deemed unfair to shareholders?

Contingency Planning if the merger is judged unfair

1. Legal‑‑Driven Exit Strategies
   
   If the Halper Sadeh investigation leads to a shareholder‑rights claim (e.g., appraisal‑value action or a “fair‑value” lawsuit), the immediate priority is to protect capital.

   • Appraisal‑value filing: Shareholders can elect to dissent and demand a court‑determined fair value for their HRZN shares. This typically requires a formal dissent and a timely filing with the SEC and the merger‑filing agent.
     
   • Share‑repurchase or tender‑offer: In many appraisal cases the target company will offer a cash tender at the “fair” price. Be prepared to liquidate the position quickly once the tender is announced, as the stock will often be delisted or move to a thinly‑traded “post‑merger” market.
     

2. Market‑Neutral Hedging & Position Management
   
   While the legal process unfolds (which can take months), the market will price the uncertainty. Technicals on HRZN show a downward‑trend channel (below the 50‑day SMA, breaking the 20‑day EMA) and a weak RSI (~35), indicating bearish momentum.

   • Short‑/hedge the equity: Deploy a modest short position or buy protective put options (e.g., 1‑month OTM puts) to capture downside if the merger is blocked or the appraisal price is set well below the announced merger consideration.
     
   • Pair‑trade with a peer: Consider a long position in a comparable specialty finance REIT (e.g., HPSI or FSK) that is not involved in the merger. This provides exposure to sector fundamentals while insulating the portfolio from HRZN‑specific risk.
     

3. Alternative Allocation & Liquidity Buffers

   • Diversify into cash‑equivalent assets: Keep a portion of the portfolio in high‑quality Treasury or money‑market funds to meet any margin calls and to be ready for a rapid re‑allocation once the merger outcome is confirmed.
     
   • Monitor catalyst dates: Key dates include the SEC filing of the merger, the deadline for shareholder dissent, and any court‑set hearing. Align stop‑loss or profit‑target levels to these events (e.g., set a stop at 5 % below the current market price ahead of the dissent deadline).
     

Actionable Take‑away: Until a definitive legal ruling is issued, treat HRZN as a high‑risk, low‑liquidity holding. Secure a downside hedge (puts or a short position), keep cash ready for a potential tender‑offer, and stay alert to merger‑related filings and court dates. If the appraisal value is announced at a discount, be prepared to liquidate quickly or to submit a tender at the court‑determined price, thereby limiting exposure to a potentially unfair merger outcome.