Investment management firm Lucus Advisors’ Red Alder Master Fund continues to press Dallas-based Capital Senior Living to explore a sale to a third party, issuing an online presentation directly to shareholders Jan. 25 as a follow-up to a Dec. 10 public letter from Lucus Advisors’ managing member Schuster B. Tanger to the company’s board of directors.
“This follows CSU’s failure to retain a qualified financial adviser to explore strategic alternatives” by a Jan. 15 deadline imposed in Tanger’s letter, fund representatives said in a press statement about the release of the materials.
Capital Senior Living stock was trading at $16.96 per share at the close of the stock market Jan. 25. The company could be sold to a “blue chip” seniors housing company or healthcare real estate investment trust for $33 to $35 per share, Red Alder maintains.
“We continue to ask that CSU immediately retain a nationally recognized investment bank, in conjunction with the establishment of a special committee of independent directors, to maximize shareholder value by exploring strategic alternatives, including a sale of the company,” the fund stated on the website. Doing so, the presentation asserts, would “put a floor on the stock’s price and increase the likelihood of a successful transaction.”
Lucus Advisors said it currently owns 6% of Capital Senior Living through its affiliated funds and managed accounts, and members of the firm have toured Capital Senior Living communities and have met with its management team “to better understand and help rectify the stock’s undervaluation,” according to the presentation. Capital Senior Living stock trades “at near 52-week lows and has declined substantially over the last three years,” it adds.
Capital Senior Living Corp. announced Jan. 14 that it will continue a program to buy back up to $10 million of its common stock. “Our board of directors and senior management strongly believe that the company’s ability to generate substantial cash flows as well as its outstanding growth prospects associated with its near- and long-term strategy are not reflected by the company’s current stock price,” Lawrence A. Cohen, the company’s CEO, said at that time. The company has experienced “substantial growth” in key financial and operating metrics and expects the growth to continue, he added.
Capital Senior Living operates 121 senior living communities in 23 states, with a total capacity for about 15,400 residents.