Family Feud at Care Enterprises Takes New Turn : Estranged Wife of One Major Shareholder Joins In-Law’s Bid for Control
A family feud over Care Enterprises is taking a new twist as the estranged wife of a major shareholder sides with her brother-in-law in attempting to gain control of the nursing home firm.
Janice Bangerter says she has given her brother-in-law control of any Care shares she receives in a divorce settlement with her husband, Dee Roy Bangerter, whose stake in Care is estimated to be worth $8 million. Her brother-in-law, Ted D. Nelson, has continually bickered with Bangerter over the way the company is run.
Nelson, in fact, said Friday that he wants the seat on Care’s board now occupied by Dee Roy Bangerter’s twin brother, Lee Roy Bangerter. The Bangerter twins are Nelson’s half-brothers, and each of the three owns 22% of Care’s shares.
Potentially 3 Owners
The deal between Janice Bangerter and Nelson--if she receives half of her husband’s shares in the divorce settlement--would split control of Care Enterprises between Nelson and the Bangerter twins. However, Dee Roy Bangerter has filed for protection from his creditors under Chapter 11 of the U.S. Bankruptcy Code, an action that generally halts divorce and other lawsuits.
Janice Bangerter could not be reached for comment Friday. Dee Roy Bangerter and Lee Roy Bangerter, who is also Care’s chairman, were said to be out of town and unavailable. Nelson said he would not comment beyond disclosures made in a filing with the Securities and Exchange Commission.
The three millionaire relatives, who also ran Knudsen Foods until it collapsed last fall, got their start with Care. It grew from one nursing home in Anaheim to the nation’s fourth-largest nursing home chain, with 124 facilities. But its profits have not grown with its size. For the nine months that ended Sept. 30, 1986, the company reported a loss of $772,000 on revenue of $197.1 million.
Lavish Salaries
Nelson is said to be unhappy with the large salaries paid at Care. In 1985, the company’s five top executives earned a combined total of $1.2 million--40% of Care’s income that year. Lee Roy Bangerter was paid $440,000.
Nelson disclosed his deal with Janice Bangerter in the SEC filing made public Friday. It indicates that the once-amicable relationship among the Bangerter principals has continued to deteriorate since Knudsen was forced to seek bankruptcy law protection. Nelson and Dee Roy Bangerter continually jockeyed for control of the troubled dairy products company and continued their dispute at Care.
Last summer, Nelson quit Care’s board of directors when the Bangerters launched a successful effort to adopt anti-takeover measures over his objections. Nelson would not say why he now wants to rejoin the board.
Nelson is seeking a board seat at Care along with R. Sam Christensen, who served as chief financial officer of Knudsen’s parent, Winn Enterprises, a business trust that is also in Chapter 11 bankruptcy proceedings. They are seeking the board seats now held by Lee Roy Bangerter and Donald E. Courts, a Diamond Bar medical doctor, whose terms expire in May .
Courts, in an interview Friday, said he is willing to give his seat to Nelson. “I’ve been on the board four or five years and Ted has always been a helpful person,” he said. “I would not object if he came back on the board and I would not object if he took my seat.”
Knudsen’s failure has had an impact on the brothers’ finances. In his bankruptcy filing, Dee Roy Bangerter said $10 million of his debt is related to Knudsen’s troubles. And Nelson, in the SEC filing, said 69% of his Class B voting shares in Care are pledged as security to Citicorp Industrial Credit Bank for a $3.3-million loan that Citicorp made to Winn Enterprises, Knudsen’s parent firm.
Since Knudsen’s collapse, Nelson has started Duke Financial, which he described as “an investment firm, a sort of merchant bank.” He is president of the firm, which is based in Orange.
