After a $4 million loss in the third quarter in 2012 and a stock value marred by a damaged reputation and far below its 2006 debut level, Assisted Living Concepts (NYSE:ALC) may be on the road to privatization.
The troubled assisted living operator is strategizing a turnaround, but due to the company’s dual class structure with Class B holders controlling more than half of the voting power, analysts at Stifel Nicolaus speculate that going private could be an outcome.
The Milwaukee-Wisconson Journal Sentinel reports:
Understaffed assisted living centers and residences, high turnover and angry state regulators, residents and families awaited Charles “Chip” Roadman when he was named top executive of Assisted Living Concepts Inc. in May.
The Menomonee Falls-based firm soon would see its stock lose roughly half its value. It would agree to a costly settlement of a lawsuit filed by the owner of 12 centers that it leased. And earlier this month it would report a net loss of $23.5 million for the first nine months of the year, wiping out nearly all its profit from 2011.
…Assisted Living Centers is planning to sell unprofitable or underperforming assets.
But in a recent report, Daniel Bernstein, an analyst with Stifel Nicolaus, wrote that the company’s stock price and the value of its real estate will not increase without an increase in occupancy.
The prospect of a lengthy turnaround has sparked speculation that the stockholders of Thornridge Holdings, a private Canadian company that holds controlling interest in ALC, may take the company private rather than wait for its stock to recover.
Regardless of who owns the company, the challenges will be the same, and Roadman has said his focus is on the company’s operations.
That has included providing additional training for employees, reducing turnover among the managers who oversee its centers and working to rebuild relationships with state regulators.
Written by Jason Oliva