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Five Star Quality Care seeks more acquisitions, buys back convertibles
By Jennifer Lanning Drey
Savannah, Ga., June 9 - Five Star Quality Care, Inc. is a conservatively run company that will continue to look for acquisition deals going forward, members of its management said during a Thursday presentation at the Jefferies Global Healthcare Conference in New York.
"The senior-living market is a large and fragmented market. Five Star has been, and will continue to be, a consolidator in this fragmented market," Bruce Mackey, its chief executive officer, said.
The company announced expansion plans in May that included agreements to acquire six senior-living communities in Indiana for $123 million and the purchase of a senior-living community in Prescott, Ariz., for $25.6 million.
Following the announcement, Five Star began a public offering of 10 million shares in June. The primary reason for the equity offering was the recent deals, Mackey said.
At the end of the first quarter, Five Star's outstanding debt included $5 million on its revolving credit facility and $37.3 million of 3.75% convertible notes due 2026.
Chief financial officer Paul Hoagland noted during the presentation that the outstanding convertible debt was originally $126.5 million when issued in October 2006, but the company has repaid $90 million of that debt over time, including $12 million that was repaid in the last 12 months.
After the equity offering, Five Star will have $15 million of cash and $22.8 million drawn on its line of credit and will assume two mortgages in the transaction for $38.2 million, Hoagland said.
Five Star is a senior living and health-care services company based in Newton, Mass.
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