Advocat (AVCA) Holder Wants Stock Split and Buyback
In an amended 13D filing on Advocat Inc. (NASDAQ: AVCA) after the close yesterday, 4.8% combined owners of the stock, Bristol Capital Advisors and Oakdale Capital Management, LLC, disclosed a letter sent to the company requesting that they consider effectuating a 3:2 share split and adopting a share repurchase program.
In the letter, the firms congratulated the company on its Q3 results, but said, "We are, however, concerned about the market's reaction to your performance during this most recent quarter. While we appreciate that Advocat represents what we believe to be the most compelling opportunity in the nursing home sector due to your low occupancy rates and relatively poorer payer mix relative to your peers (factors that we perceive as opportunities, not risks), your low daily trading volume has impeded the ability of sophisticated investors to take advantage of the opportunity and has resulted in Advocat trading at a substantial discount to the valuation of its peers. As you have rejected our offer to acquire the Company, we ask that you do what is in the best interests for all the shareholders and engage immediately in a 3:2 share split as well as a share repurchase program."
A Copy of the Letter:
Dear Mr. Council:
Bristol Investment Fund, Ltd. and Oakdale Capital Partners I, LP(collectively, "we") are the beneficial owners of a total of approximately 4.8%of the outstanding common stock of Advocat Inc. ("Advocat" or the "Company").
Let us first begin by congratulating you on the Company's performanceduring your third fiscal quarter ended September 30, 2006. Obviously, the highreturn on invested capital in your renovations is having a tangible impact onoccupancy rates as well as payer mix which, when coupled with the opportunitiesthat exist in the assisted living center market in general, lead us to remainvery optimistic about Advocat's ability to grow its free cash flow materially inthe coming months and years.
We are, however, concerned about the market's reaction to yourperformance during this most recent quarter. While we appreciate that Advocatrepresents what we believe to be the most compelling opportunity in the nursinghome sector due to your low occupancy rates and relatively poorer payer mixrelative to your peers (factors that we perceive as opportunities, not risks),your low daily trading volume has impeded the ability of sophisticated investorsto take advantage of the opportunity and has resulted in Advocat trading at asubstantial discount to the valuation of its peers. As you have rejected ouroffer to acquire the Company, we ask that you do what is in the best interestsfor all the shareholders and engage immediately in a 3:2 share split as well asa share repurchase program. Please feel free to contact either of us at yourconvenience to discuss this matter further.
Yours truly,
Paul Kessler
Manager
Bristol Capital Advisors, LLC
Yours truly,
David Cheng
Managing Member
Oakdale Capital Management, LLC
In the letter, the firms congratulated the company on its Q3 results, but said, "We are, however, concerned about the market's reaction to your performance during this most recent quarter. While we appreciate that Advocat represents what we believe to be the most compelling opportunity in the nursing home sector due to your low occupancy rates and relatively poorer payer mix relative to your peers (factors that we perceive as opportunities, not risks), your low daily trading volume has impeded the ability of sophisticated investors to take advantage of the opportunity and has resulted in Advocat trading at a substantial discount to the valuation of its peers. As you have rejected our offer to acquire the Company, we ask that you do what is in the best interests for all the shareholders and engage immediately in a 3:2 share split as well as a share repurchase program."
A Copy of the Letter:
Dear Mr. Council:
Bristol Investment Fund, Ltd. and Oakdale Capital Partners I, LP(collectively, "we") are the beneficial owners of a total of approximately 4.8%of the outstanding common stock of Advocat Inc. ("Advocat" or the "Company").
Let us first begin by congratulating you on the Company's performanceduring your third fiscal quarter ended September 30, 2006. Obviously, the highreturn on invested capital in your renovations is having a tangible impact onoccupancy rates as well as payer mix which, when coupled with the opportunitiesthat exist in the assisted living center market in general, lead us to remainvery optimistic about Advocat's ability to grow its free cash flow materially inthe coming months and years.
We are, however, concerned about the market's reaction to yourperformance during this most recent quarter. While we appreciate that Advocatrepresents what we believe to be the most compelling opportunity in the nursinghome sector due to your low occupancy rates and relatively poorer payer mixrelative to your peers (factors that we perceive as opportunities, not risks),your low daily trading volume has impeded the ability of sophisticated investorsto take advantage of the opportunity and has resulted in Advocat trading at asubstantial discount to the valuation of its peers. As you have rejected ouroffer to acquire the Company, we ask that you do what is in the best interestsfor all the shareholders and engage immediately in a 3:2 share split as well asa share repurchase program. Please feel free to contact either of us at yourconvenience to discuss this matter further.
Yours truly,
Paul Kessler
Manager
Bristol Capital Advisors, LLC
Yours truly,
David Cheng
Managing Member
Oakdale Capital Management, LLC
Labels: AVCA, Bristol Capital Advisors, Oakdale Capital Management
posted by Lon at 12:00 PM
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