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Care Enterprises Reduces Public Offering by 30%

July 12, 1986|JAMES S. GRANELLI | Times Staff Writer

Citing declining stock market conditions and a feuding shareholder's withdrawal from a joint stock sale, Care Enterprises in Laguna Hills trimmed its previously announced public offering by 30% and began selling 2.5 million shares of its Class A common stock Friday at $5.25 a share.

Care, the nation's fourth largest nursing home operator, will apply the estimated $13-million net proceeds of the sale entirely to its huge $194-million long-term debt, according to Boyd W. Hendrickson, president and chief operating officer.

Most of the debt, which carries an average 14% interest cost, was incurred from 1983 to 1985, when the company swelled from 40 to 124 facilities in seven states.

While Care originally had planned to offer 3 million shares of the special Class A stock, the offer was trimmed, Hendrickson said, because "the market condition in general was not good for a public offering. The stock market fell 100 points in the last month."

Additionally, about 500,000 shares were pulled off the market last week by founding shareholder Ted Nelson, who resigned as a Care Enterprises director May 5 in a dispute with his half-brothers and co-founders, Lee and Dee Bangerter.

Nelson, who also owns 22% of the company's Class B stock, could not be reached for comment on why he withdrew his shares from the offering.

Each share of the Class A stock represents one-tenth of a vote, while Class B shares carry a full vote. Nearly 115,000 shares in the Class A offering were held by Ralph Hazelbaker and John Haemmerle, principals in the First Ohio Investment Group, which Care Enterprises bought in April, 1985.

The rest of the offering--just under 2.4 million shares--was newly authorized stock that raised the total number of Class A shares outstanding to more than 5.2 million.

Drexel Burnham Lambert Inc. and Dean Witter Reynolds Inc. are managing the offering.

The $5.25-a-share price was the lowest the Class A stock has sold for in the last year. The stock, which had been as high as $8.25 a share in the last year, closed at $5.50 Friday. The company's Class B common stock closed at $6.13, down 12 1/2-cents from Thursday's closing.

Nelson's quarrel with the Bangerters centered on his opposition to the reincorporation of the company under a charter that he claimed effectively strips minority shareholders of control. The charter, approved last month, requires a 75% shareholder vote to oust a director. The Bangerters own 45% of the Class B stock and 37% of the Class A stock, making it impossible for a director to be removed without their approval.

Nelson and the Bangerters also own a majority stake in Winn Enterprises, a holding company for the Knudson Foods dairy company in Los Angeles, Mountain West Savings & Loan Assn. in Ogden, Utah, and numerous real estate holdings.

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