tag:blogger.com,1999:blog-2080506270244832638.post8370135056609655374..comments2024-03-28T07:17:13.573-05:00Comments on Clark Street Value: Regional Health Properties: Inadequate Pref Exchange OfferMDChttp://www.blogger.com/profile/10679835609782815537noreply@blogger.comBlogger49125tag:blogger.com,1999:blog-2080506270244832638.post-62823433779270101572023-02-14T17:55:35.405-06:002023-02-14T17:55:35.405-06:00Round 2 of the exchange offer announced. This time...Round 2 of the exchange offer announced. This time, they're giving common shareholders a bunch of voting preferred shares, so there will probably be enough votes to approve the amendments.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-7997761315631257502022-12-23T11:35:45.185-06:002022-12-23T11:35:45.185-06:00Failure of last shareholder vote for the preferred...Failure of last shareholder vote for the preferred exchange, I believe is in a big part due to record date being too close to the announcement. Everyone who was not interested in the exchange or opposed to it, just walked by selling shares. Those that bought the shares were not eligible to vote as most of the volume happened after the record date. <br /><br />Now a days there isn't much volume of common. However looking at similar thinly traded stocks that had tender offers recently, noticed that huge number of shares were tendered. What this seem to imply is that, it is not that the shareholders are asleep but they don't feel like they can get a proper quote in such thinly traded market but are happy to get out at any reasonable price that can absorb volume.<br /><br />As a suffering RHE-PA holder, I am wondering if as a group we made a tender offer to common holders to purchase say around $3 or so, if it would be possible to get hold of enough shares to retry some kind of exchange. If residual value is $25 mil, Around $3 for common, common gets little over 20% and the rest to preferreds. Any thoughts? Appreciate feed back from RHE-PA holders or others. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-14400908666277043642022-12-01T13:53:13.694-06:002022-12-01T13:53:13.694-06:00Last quarter was ugly. What are the chances of ban...Last quarter was ugly. What are the chances of bankruptcy, I am wondering. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-91561905993407856422022-03-29T13:15:38.353-05:002022-03-29T13:15:38.353-05:00Company has 1.73 million common shares. Since Feb ...Company has 1.73 million common shares. Since Feb 23rd about 1.3 million shares have traded hands. In worst case scenario if that only about .43 million shares will be eligible to vote. Of course some of that trading will be by folks that bought after Feb 22nd. So let's say instead of .43 mil, about a million shares are still in the hands of those that bought before record date. How will the company muster enough proxy votes. I am assuming that those that sold are not likely to respond even if the company tries to contact them trying to encourage them to vote. Does anyone know what happens to the limbo shares? <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-63638537087347426732022-03-21T10:51:18.055-05:002022-03-21T10:51:18.055-05:00Offered my RHE.PRA to be exchanged for series B. A...Offered my RHE.PRA to be exchanged for series B. Also bought some common shares of RHE in recent past. Wondering why there is no proxy for common to approve this PRA to PRB exchange. Don't they have to approve before this exchange can take place?<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-21228572717318198832021-11-28T20:44:16.740-06:002021-11-28T20:44:16.740-06:00I think it is everyone's best interest to come...I think it is everyone's best interest to come to an exchange agreement. The 11% of the common is worthless if they don't come to an agree with the preferred stock. It's a bit of a game of chicken, there's definitely an opportunity for the public senior housing plays to grow, but RHE can't do that with the current capital structure. So for management, they should be incentivized to come to a deal, fix the balance sheet, and then attempt to grow the platform, that's their biggest upside. SG&A is a bit bloated, but not like the CEO makes life changing money where he can just hang out in the status quo. But this is a smallish position for me, sized it so I'm not thinking about it daily and coming up with conspiracy theories on why they haven't revised the offer, just content to wait.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-55665848352491357632021-11-28T19:46:58.501-06:002021-11-28T19:46:58.501-06:00Thank you. What is the likely path for management ...Thank you. What is the likely path for management going forward? I saw that they collectively own about 11% of common and have bloated SGA expenses. It doesn't look like they have any motivation to do the right thing for the preferred. What's the likely downside scenario at this level?Anonymoushttps://www.blogger.com/profile/06283873099624445752noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-23038549323207419192021-11-28T18:22:25.221-06:002021-11-28T18:22:25.221-06:00Thanks! Um, not a lot of new thoughts. A bit dis...Thanks! Um, not a lot of new thoughts. A bit disappointed that their occupancy numbers haven't really bounced in Q3, they're significantly lower than the senior housing operator I just wrote up in SNDA. Going off memory here, but I think the prefs will finally get a board member soon, maybe that helps grease the wheels some. But I worry that Charles Frischer's expectations are a bit too high, the prefs should get all the value, doesn't mean it will. I'm still holding my original position, current price is approximately my cost basis.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-37781733052576005382021-11-28T12:49:31.683-06:002021-11-28T12:49:31.683-06:00I am a big fan of your work. Just curious, any new...I am a big fan of your work. Just curious, any new thoughts on this?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-56001223194336182682021-08-05T03:04:09.400-05:002021-08-05T03:04:09.400-05:00VIC writeup now public: https://www.valueinvestors...VIC writeup now public: https://www.valueinvestorsclub.com/idea/REGIONAL_HEALTH_PROPERTS_INC/0994955708writserhttps://www.blogger.com/profile/04755781938953507727noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-64782375440695560692021-07-15T11:11:06.403-05:002021-07-15T11:11:06.403-05:00Thanks, I appreciate the thoughts and agreeThanks, I appreciate the thoughts and agreeMDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-13828395958437343222021-07-15T10:42:10.226-05:002021-07-15T10:42:10.226-05:00For what its worth, I've decided #1 is moot. ...For what its worth, I've decided #1 is moot. No securities attorney worth their salt lets Frischer make that filing unless they know they've already got >25%. I think they've got the votes lined up, even if not explicitly stated in the filing. Pref will be getting board seats soon. Then things start looking up. Ghttps://www.blogger.com/profile/11583652613386648743noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-59183547373367734162021-07-09T11:24:24.368-05:002021-07-09T11:24:24.368-05:00A couple thoughts/questions here...
1) The good n...A couple thoughts/questions here...<br /><br />1) The good news is that Charles Frischer finally got around to calling for a special meeting to enable the pfd to get 2 board seats. But he only owns 14% and needs 25%. His filing states, "The letter further requested that after the Issuer has received requesters from holders of greater than 25% of the shares of the Preferred Stock, the Issuer set a date for the referenced special meeting." Does anyone understand the process for submitting "requesters?" How would minority RHEpA holders join Frischer? <br /><br />2) CEO Morrison's new employment agreement is out, and it looks like he's getting 96K in various grants/awards/options over the coming years. If I'm reading it right, only the 24K share 7/1/21 grant will be at the current share price (potentially bad for Morrison if the exchange ratio goes up,) but the remaining 72K shares of future awards/options will be struck at the price on the grant date. My thinking is Morrison might be willing to sacrifice his current negligible holding (14K shares) and the first grant, knowing that he'll be getting new equity at some future diluted price. Not enough to induce him to go along with a truly fair exchange offer (~10:1), but he should be better able to swallow something greater than 0.5.<br /><br />Board member Fox would be harder to convince, but majority of his holdings were purchased <$2. He shouldn't lose beyond the fake paper gains the meme stock status has provided. Ghttps://www.blogger.com/profile/11583652613386648743noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-59157967399676396682021-07-03T11:55:04.131-05:002021-07-03T11:55:04.131-05:00It appears to be the exchange offer they initial p...It appears to be the exchange offer they initial proposed, 0.5 shares of RHE for each pref.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-6436981341942326202021-07-02T17:14:16.167-05:002021-07-02T17:14:16.167-05:00http://archive.fast-edgar.com/20210702/A2BIW62CZW2...http://archive.fast-edgar.com/20210702/A2BIW62CZW22AZ7O222H2ZZ25G2RZY22Z232/<br /><br />Looks like they're diluting the common. Ball is rolling.EJLnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-79184666191534375612021-06-17T11:30:13.695-05:002021-06-17T11:30:13.695-05:00I wish Charles Frischer would tell the company wha...I wish Charles Frischer would tell the company what he really thinks.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-53859321356622668102021-06-09T21:32:14.841-05:002021-06-09T21:32:14.841-05:00It is just a proposed offer at this stage, once th...It is just a proposed offer at this stage, once they move forward with it, you'll have an opportunity to participate or not. But its not a continuously ongoing offer that you can exchange at anytime. There might be several, see AHT for a possible example of how things might play out.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-5560675489169022252021-06-09T16:22:29.198-05:002021-06-09T16:22:29.198-05:00Can I redeem this for common shares at any time or...Can I redeem this for common shares at any time or only once there is an offer that everyone agrees on? AWhttps://www.blogger.com/profile/17766731367114957929noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-33311332271910581832021-06-07T20:01:27.119-05:002021-06-07T20:01:27.119-05:00I agree, I believe it’s sort of a legacy of the ol...I agree, I believe it’s sort of a legacy of the old business model where they operated the facilities as well, they moved to get out of that business and be a landlord, so they turned around and subleased their leased portfolio.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-62730967267577938192021-06-07T19:23:42.482-05:002021-06-07T19:23:42.482-05:00Not a fan of the company having large portions of ...Not a fan of the company having large portions of "lease sandwiches" (basically the WeWork of healthcare) where they lease a property long and re-lease the property to operators... in a distressed situation. <br /><br />If not for that aspect I would be more involved. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-92731057595946702021-06-07T15:41:25.883-05:002021-06-07T15:41:25.883-05:00Some good points. While in principle the common sh...Some good points. While in principle the common should own basically zero percent of the pro forma entity it seems unlikely that that is going to happen here, given insider ownership and the idiotic trading price of the common.<br /><br />It's basically a battle between the common holders and the pref holders. However, I think one important aspect to keep in mind is that insiders wanted to get rid of the prefs in the first place! They think they can grow the company, for that it's probably a good idea to get rid of the overhang. Now, insiders own ~10% of the common, they probably are not going to give that away for nothing.<br /><br /><br />But the current deal is never going to pass. I think there probably is room to meet in the middle. I.e. common holders end up with 10% - 25% of the company, i.e. 1 for 1 or something like that. Shitty deal for the pref holders, but the flip side is that, if you do it quickly, the pref holders get $25 in common for $10 in prefs or something like that (at market prices) and given the madness in the common they might be able to sell their shares to the meme traders.<br /><br />I agree that Chapter 11 would be a disaster for everyone ..<br /><br />The above is not a strongly held opinion, just some random thoughts.<br /><br />Thanks for posting, very interesting situation. What I like is that you have the tail upside of the meme stock while the downside is protected by the seniority of the prefs. What if the common goes to $50? Probably very unlikely, but can't rule it out .. Where would the prefs trade in that scenario?writserhttps://www.blogger.com/profile/04755781938953507727noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-70473310890774078192021-06-05T15:04:21.895-05:002021-06-05T15:04:21.895-05:00ADL - there's a lot of sense in what you say o...ADL - there's a lot of sense in what you say on the timing I hadn't considered. I guess we'll see...s445203https://www.blogger.com/profile/07502525237477172509noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-35093078566426865352021-06-04T12:10:41.567-05:002021-06-04T12:10:41.567-05:00I agree w/you about the setup, s445, and would add...I agree w/you about the setup, s445, and would add that Ch11 is unlikely, both because they have the cash and mgmt almost always sees that as a last resort (unless they are highly strategic and doing a prepack). Plus it'd be very risky. For a small enterprise like RHE, even a consensual tactical bankruptcy has the opportunity to convert to wipe them out because of fees (the Altman/Wang bankruptcy book mentions this, if I recall; I was surprised but shouldn't have been). <br /><br />I disagree, somewhat, about the timing. It's definitely a fiesta of game theory, but the market's given RHE a gift in the form of its current stock price. There is no telling how long that gift will last, and management wants to strike while they can. Too bad they don't have an active shelf (as far as I know), though there's no telling whether that would kill the rally (like what happened with GOED recently--not quite the same, but essentially a recap). So while it's true prefs don't have all the power or value, the clock is ticking, management has no idea when it stops, and I'm sure they'd prefer a cleaner capital structure when it does. <br /><br />Also, since the stock price (up 10x in the last 6 months with not much change in the biz!) seems driven primarily by technical and sentiment weirdness (my guess, anyway, as good/bad as any), I think management might be thinking that a pref takeout and "bold new growth strategy"-type thing as hinted at might even drive the price up yet further (my guess of their guess). <br /><br />So their incentive is to get this done ASAP and keep pressing on the gains. My further guess is that the initial offer might be in part a signal to common holders of the stock's high value: look at how much .5 share of RHE is worth! If so, that boxes them in a little bit in terms of next moves; they can't, say, quadruple the offer without probably dinging the common. As MDC says, it's reflexive. And guessing intents and signaling is def of a sucker's game, since you can ascribe any motive to anyone.<br /><br />If I were management I'd be working very hard to get this done quickly, anyway. Current common price is a gift horse. I'd maybe bump the common and add either a low-face pref, some warrants, or both, do a shelf and an ATM as soon as humanly possible. Then again, I am not running a public company so there are probably all sorts of flaws in my analysis. ADLhttps://www.blogger.com/profile/11578314123744054067noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-11493070831526331972021-06-04T08:43:33.237-05:002021-06-04T08:43:33.237-05:00Delighted to be able to give something back after ...Delighted to be able to give something back after enjoying your thoughtful blog over the years. And BTW, if you want to watch what happens to prefs which have stopped paying divs and have accrued lots of unpaid interest in Ch. 11, be sure to watch the Navios Maritime (NM) Ch. 11 docket which should start screening near you sometime this fall (I'd be amazed if it doesn't!). It's a bit different there as it's almost certain the debt is impaired, but the prefs are at $9-10 today with maybe $8-10 of unpaid interest on top of the $25 par Cheers!s445203https://www.blogger.com/profile/07502525237477172509noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-89218631837316792532021-06-04T08:13:54.900-05:002021-06-04T08:13:54.900-05:00Thanks for the great/thoughtful comment. I was th...Thanks for the great/thoughtful comment. I was thinking about this dynamic yesterday too, the benefit of preferred stock to a company is its not debt, and not paying doesn't force them into bankruptcy where the prefs can enforce their seniority. Do have to play somewhat nice with the common, but as someone else suggested earlier, you can see how the AHT common has benefited from the pref exchanges and its a similar reopening/meme type trading sardine. I'll calm my expectations, maybe we get a little better offer, but points all well taken. Thanks again.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.com