Dallas-based Capital Senior Living appears to have received enough votes to follow through with a plan to raise up to $154.8 million through the private placement of convertible preferred stock to affiliates of Conversant Capital and a common stock rights offering to existing stockholders, based on preliminary results of votes tallied a special meeting of shareholders on Friday.
The results are considered preliminary until the votes are tabulated and certified by the independent inspector of election, after which the official results will be reported on a Form 8-K that will be filed with the U.S. Securities and Exchange Commission.
“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,” Capital CEO and Director Kimberly S. Lody said Friday in a statement. “We look forward to continued engagement with all of our shareholders and to working towards long-term financial success and delivering enhanced value.”
The Conversant deal has not been without controversy since it was announced in July. For months, Orelius Advisors and others have urged stakeholders to vote against the board of directors, claiming that the operator’s investment with Conversant would harm shareholders. As recently as last Tuesday, Ortelius remained firm in urging other stockholders to vote against the company, stating that “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 had committed to immediately infusing $30 million in contingency-free capital via a rights offering, and Invictus had publicly committed to immediately infusing $25 million in contingency-free capitals as an alternative to the operator’s fundraising plans with Conversant and its affiliates, Orelius noted.
Invictus commented previously that it was “ready, willing and able to provide capital to CSU without conditions (other than customary documentation) or diligence. That initial tranche of capital will ensure the company can extend its near-term maturities and execute an optimal, long-term financing arrangement that minimizes dilution and cost to shareholders, while at the same time providing operating flexibility for the business.”
The expiration date for Capital Senior Living’s pending rights offering is Oct. 27 at 5 p.m. ET, unless extended by the company. Pursuant to the rights offering, existing stockholders have the right to purchase 1.1 shares of common stock for each share of common stock they held as of the record date of Sept. 10, at $30 per share.
Ortelius and Invictus had not responded to McKnight’s Business Daily requests for comments by the production deadline.
