Care Enterprises to Review Offers
Care Enterprises Inc. said Thursday that it has established a special directors’ committee to review offers to acquire control of the embattled Laguna Hills nursing home operator, but the company’s president said the board “wants to keep the company independent.”
The naming of the new committee came just two days after Southmark Corp., a Dallas financial services and real estate conglomerate, announced that it wants to acquire a controlling interest in Care Enterprises.
Southmark said it had already secured the voting rights to about 23% of the company’s voting shares from Ted Nelson, a dissident co-founder and former director.
Although Care has yet to be officially contacted by Southmark, directors said Thursday that a special committee was needed to evaluate the company’s alternatives and help plot its response to potential offers.
But Boyd Hendrickson, Care’s president, said the board would oppose a sale to outside interests.
The company’s four outside directors were named to the committee in an effort to steer around the ongoing family feud between Nelson and his half-brothers and co-founders, Lee and Dee Bangerter. The Bangerter brothers are members of the board and Care Enterprise officers.
The 18-month dispute between Nelson and the Bangerters, which prompted Nelson’s decision to cooperate with Southmark, broke into the open at Thursday’s annual shareholder meeting, where Nelson won a victory when the company withdrew a controversial proposal to indemnify its directors.
The proposal, which Nelson adamantly opposed, would have allowed Care to establish a trust account of at least $100,000 to cover costs associated with lawsuits involving the directors. Nelson, who resigned his seat on Care Enterprises’ board last year to protest the proposal, had directed that his 23% of the votes be cast against the plan.
In addition, Nelson won an injunction in U.S. Bankruptcy Court earlier this week preventing Dee Bangerter from voting his stock in favor of the proposal because he no longer has control over the shares. Dee Bangerter filed for reorganization of personal debts in January and his assets are under control of the bankruptcy court.
Nelson figures into the bankruptcy proceeding because he has an agreement with Dee Bangerter’s former wife to vote her share of the company stock. Janice Bangerter has said she is entitled to half of her former husband’s shares of the company, and Nelson has argued that he is entitled to vote those shares.
Nelson’s attorney said Thursday that he opposed the indemnification proposal because it would have allowed the company to establish a hefty trust account that any new management team at Care Enterprises could not touch. Nelson’s agreement with Southmark calls for him to be named chairman and chief executive officer of Care Enterprises if Southmark acquires control of the company.
In addition to Nelson’s shares, Southmark is looking to acquire Dee Bangerter’s shares and has offered him up to $3 each. But Bangerter said Thursday that he is “not at all” interested in selling.