With a Friday meeting of stakeholders looming, Capital Senior Living and Ortelius Advisors continue to angle for votes on Capital’s proposed $152 million capital raise plan through the private placement of convertible preferred stock to affiliates of Conversant Capital.
Dallas-based Capital Senior Living’s July announcement of the plan was met with swift disapproval by Ortelius and others. Ortelius founder and managing member Peter DeSorcy argued that the operator’s investment with Conversant would harm shareholders. Ortelius has committed to immediately infusing $30 million in contingency-free capital via a rights offering, and Invictus has publicly committed to immediately infusing $25 million in contingency-free capitals an alternative to the operator’s fundraising plans with Conversant and its affiliates, Orelius noted.
In a press release issued Tuesday, Ortelius remained firm in urging other stockholders to vote against the company. Ortelius owns approximately 12.7% of the outstanding common stock of Capital. According to Ortelius, “voting down the transactions will enable Capital Senior Living’s board of directors to finally pursue readily available and far better financing alternatives being championed by sizable stockholders, such as Ortelius and Invictus Global Management LLC.”
Ortelius, DeSorcy said, is trying to block Capital’s arrangement with Conversant because it “firmly believes in Capital Senior Living’s long-term prospects.” He described the deal as “costly, dilutive and poorly structured.”
“Ortelius has spent hundreds of hours analyzing the company and can state with great confidence that we would not be opposing the deal if we felt there was a chance Capital Senior Living would descend into insolvency upon the transactions being voted down at the special meeting,” he said. “We categorically reject the board’s brazen claims and unseemly scare tactics, which are motivated by the incentives afforded to Conversant, Arbiter Partners, Silk Partners and management, and notably at the expense of all other stockholders.”
Capital maintains that a vote against the Conversant transactions would put the company’s future in “jeopardy,” according to a letter to shareholders publicly shared on Tuesday. Without a significant capital raise, the board said previously, the company is likely to run out of cash before the end of the year.
“The amended transactions make strategic and financial sense for the company and will position CSU for increased shareholder value and long-term success,” Capital said Tuesday.
