Transcript

A few weeks ago, we wrote about the proposed recapitalization of Capital Senior Living. This will give effective control to the investor, Conversant Capital, and result in a lot of dilution to existing shareholders. The investment is also very expensive.

We thought that Cap Senior may have had no other choice: either this or face a major liquidity crunch, and possibly bankruptcy. One investor, Ortelius Advisors, with just under a 10% interest, thinks differently, and blasted management in writing.

They think there are other ways to recap the company, and that other like-minded shareholders would be willing to help out financially as well. This may all be true, but where were they in the past several months? They knew there was a “going concern” problem, but did they propose anything to management? Did management reach out to them?

Existing shareholders are going to get the shaft with dilution, no question, but it also assumes the recap will work out. Bad as the Conversant Capital deal may be, we have not heard any other options, nor anyone else stepping forward. You have to put your money where your mouth is. And the share price is now 44% below the price before the announcement. Can’t wait for the earnings call tomorrow.