Senior care community investment company Care Investment Trust Inc. (OTCQX:CVTR) has announced it will combine businesses with its majority shareholder, Tiptree Financial Partners, L.P. to create a financial services operating company that will hold and manage both companies’ assets and operate each company’s businesses.
Tiptree Financial Partners is a diversified financial services holding company that currently owns 90.8% of Care Investment Trust.
The terms of the agreement include each company contributing substantially all of its assets to Tiptree Operating Company, LLC, a newly-formed Delaware limited liability company. Care and Tiptree will own proportionate interests in the new operating subsidiary, and at closing, Care will change its name to Tiptree Financial Inc. while remaining a public company.
“By combining Tiptree with Care we will be creating a larger, more diversified business platform,” said Geoffrey Kauffman, vice chairman of the board of directors of Care Investment Trust and CEO of Tiptree in a statement. “ I expect that the transaction will create greater liquidity for shareholders, better access to the capital markets and a broader opportunity set for future capital allocations.”
Tiptree has invested in Care Investment Trust since August 2010.
The real estate investment trust will rename its existing common stock as “Class A common stock” with no change in the economic or voting rights of such stock. It will also reclassify some of its authorized and unissued shares of common stock as “Class B common stock” for issuance to Tiptree in connection with the contribution transaction.
When the transaction closes, Care Investment Trust will hold approximately 25% of the membership interests in, and will be the managing member of, the newly-formed operating subsidiary, with Tiptree holding the remaining 75% of membership interests plus shares of Class B common stock of Care. The shares will have voting rights but no economic rights.
In connection with the transaction, Tiptree plans to privately offer to qualified Tiptree limited partners the right to receive shares of Care common stock currently owned by Tiptree, in exchange for those partners’ proportionate interests in Tiptree.
If the deal closes as planned, Care Investment Trust will become a taxable corporate retroactive from the closing date to Jan. 1, 2013.
Written by Alyssa Gerace