Shareholders of Capital Senior Living (NYSE: CSU) have approved a deal with Conversant Capital, including financing transactions to raise up to $154.8 million, according to preliminary results of a vote held on Friday.
“We are very pleased with the outcome of today’s Special Meeting and want to thank our shareholders for their continued support, engagement and feedback throughout this process,” said Capital Senior Living CEO and Director Kimberly S. Lody. “We strongly believe that the amended transactions represent the best path forward by providing the capital to address our immediate liquidity needs and going concern issues, while stabilizing and positioning the company for future growth.”
After first announcing a deal with Conversant in July 2021, Dallas-based Capital Senior Living became embroiled in a battle with shareholder Ortelius Advisors.
Ortelius objected to the Conversant deal, saying that the proposed transactions undervalued Capital and ceded too much control of the company to Conversant. Ortelius argued that the senior living provider was not in immediate need for interim financing, and that more favorable terms were possible to achieve in any case.
Capital Senior Living’s leadership countered that the company in fact did need an immediate and substantial cash infusion, in light of pandemic-related occupancy hits and rising expenses, along with approaching debt maturities.
Alternative proposals did arise, including one from Invictus earlier this month. Capital Senior Living held firm in its position that the Conversant deal represented the “only viable path forward” — but, the provider and Conversant did amend the terms of the proposal, including by reducing the amount of preferred stock involved and bringing in commitments from shareholders Silk and Arbiter.
The precise results of the Oct. 22 vote will be released in a Securities and Exchange Commission (SEC) 8-K filing after tabulated and certified by the independent inspector of election.
Over the last several years, Capital Senior Living has been engaged in an operational turnaround and portfolio restructuring effort, which has seen the portfolio shrink from about 130 communities to roughly half that size.
Going forward, Lody and the leadership team plan to grow the company in part by expanding its management services business. And, they have taken steps to evolve the operational model, including through the creation of a new memory care framework dubbed Magnolia Trails.
In September 2021, Capital posted average occupancy of 81.4% and marked its seventh consecutive month of census growth. However, growth was slower than in previous months, due partly to “capital constraints and expense management activities” that caused delays in tours and move-ins, the company stated in an Oct. 14 announcement.
Capital Senior Living shares ended regular trading up 2.38% on Friday, at $29.68.
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