Care Enterprises Chairman Rebuffs His Half-Brother’s Bid for Board Seat
The chairman of closely held Care Enterprises said a bid by his half-brother to regain a seat on the nursing home firm’s board of directors isn’t welcome even though he owns a large block of stock.
Lee Roy Bangerter, Care’s chairman, said in an interview on Tuesday that the company is well run now and that allowing his half-brother Ted D. Nelson “on the board is like letting a fox loose in a chicken coop . . . . Ted’s my brother and I love him, but he’s a high-risk person and I’m not.”
Nelson said last week that he wants Bangerter’s seat on Care’s board of directors because he is unhappy with the way the company is run. Nelson and twins Lee Roy Bangerter and Dee Roy Bangerter each own 22% of Care’s stock, which is publicly traded. Their stakes are worth about $8 million each.
Care Enterprises, based in Laguna Hills, is the nation’s fourth-largest nursing home firm. The company started with one nursing home in Anaheim, and has grown to include 124 facilities in seven states. Despite its growth, it has consistently lagged behind other nursing home firms in profits. For the nine months ended Sept. 30, Care reported a loss of $772,000 on revenue of $197.1 million.
The company has been at the center of a feud among the brothers that surfaced last summer, when Nelson quit the board after the Bangerters put anti-takeover measures into place over Nelson’s objections.
Last October, Nelson tried to sell his shares back to his brothers in exchange for five nursing homes and other real estate holdings, but the Bangerters refused.
Nelson said in an interview Tuesday that Care’s poor performance indicates that a change in leadership is needed. “I don’t necessarily want to control the company,” he said. “I just want to maximize the value of my shares.”
Nelson’s quest for a seat on Care’s board is complicated by an unusual agreement between Nelson and his sister-in-law, Janice Bangerter, who is seeking a divorce from Dee Roy Bangerter. Janice Bangerter has agreed to let Nelson control any Care shares she receives from a divorce settlement.
If Janice Bangerter receives half of her husband’s shares, as she is demanding, control of Care would be split between Nelson and the Bangerter twins. However, Dee Roy Bangerter has filed for protection from his creditors under Chapter 11 of the federal bankruptcy code, an action that generally halts divorce and other lawsuits.
Dee Roy Bangerter is Care’s vice chairman and recently became an executive vice president, responsible for the company’s finances. He called his wife’s deal with Nelson “unfortunate,” and said he did not believe his bankruptcy filing would result in the sale of a significant number of his shares to pay his creditors.
Lee Roy Bangerter also criticized the deal between Nelson and Janice Bangerter and said it was “splitting up the family.”
Nelson said he is not to blame. “I didn’t know my brother and his wife were having problems until much later,” he responded. “I didn’t engineer a divorce.”
Dee Roy Bangerter and Nelson have each experienced financial difficulties as a result of troubles at another company the brothers controlled, Winn Enterprises. Winn Enterprises was the parent of Knudsen Foods, the largest dairy processor in the West until it filed for Chapter 11 protection from its creditors last fall.
Nelson has pledged virtually all of his Care Enterprises shares as security for more than $3 million in debt he took on to finance Winn’s operations, and he acknowledged in the interview that he has “obligations to satisfy. The only way to do that is to get value out of Care.”
