BEI suitor protests bill that protects homes in event of takeover
Feuding continues between BEI of Fort Smith, AR, and Formation Capital LLC of Alpharetta, GA. This time the point of controversy is a bill in the Arkansas House to protect nursing home facilities if a takeover by Formation, or another suitor, does take place.
The bill, which was recommended by a House panel last Thursday and now goes to the Arkansas House, "ensures that in the event of a takeover of a publicly traded long-term care facility, that the applying party must establish that they are capable of continuing that same quality care," said John Paul Verkamp (R), the sponsor of the bill.
But Formation Capital, LLC and its associates, Appaloosa Management L.P. and Franklin Mutual Advisers, LLC, which are trying to gain ownership of the nursing home chain, disputed the legality of the bill last week. Formation Capital, which owns about 8% of BEI, formerly Beverly Enterprises Inc., is trying to install its own board of directors at the company's April 21 annual meeting.
"While we agree with the purported goal of protecting long-term care residents, this bill does nothing to advance that goal. Instead, it is a thinly disguised vehicle designed to further entrench the management and board at Beverly with no regard as to the interest and will of the Company's owners - its shareholders," Formational Capital and its partners said. "Furthermore, we believe the bill would violate Federal and State law."