0001019687-08-000422.txt : 20080204
<SEC-HEADER>0001019687-08-000422.hdr.sgml : 20080204
<ACCEPTANCE-DATETIME>20080204161940
ACCESSION NUMBER: 0001019687-08-000422
CONFORMED SUBMISSION TYPE: SC 13D
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20080204
DATE AS OF CHANGE: 20080204
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: BRISTOL INVESTMENT FUND LTD
CENTRAL INDEX KEY: 0001174866
IRS NUMBER: 000000000
FILING VALUES:
FORM TYPE: SC 13D
BUSINESS ADDRESS:
STREET 1: CALEDONIAN HOUSE
STREET 2: JENNETT STREET, GEORGE TOWN
CITY: GRAND CAYMAN
STATE: E9
ZIP: #
MAIL ADDRESS:
STREET 1: CALEDONIAN HOUSE
STREET 2: JENNETT STREET, GEORGE TOWN
CITY: GRAND CAYMAN
STATE: E9
ZIP: #
FORMER COMPANY:
FORMER CONFORMED NAME: BRISTOL INVESTMENT FUND INC
DATE OF NAME CHANGE: 20020605
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: ADVOCAT INC
CENTRAL INDEX KEY: 0000919956
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051]
IRS NUMBER: 621559667
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-43225
FILM NUMBER: 08572505
BUSINESS ADDRESS:
STREET 1: 1621 GALLERIA BLVD.
CITY: BRENTWOOD
STATE: TN
ZIP: 37027
BUSINESS PHONE: 6157717575
MAIL ADDRESS:
STREET 1: 1621 GALLERIA BLVD.
CITY: BRENTWOOD
STATE: TN
ZIP: 37027
</SEC-HEADER>
<DOCUMENT>
<TYPE>SC 13D
<SEQUENCE>1
<FILENAME>advocat_13d-012808.txt
<TEXT>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
Advocat Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
007586100
- --------------------------------------------------------------------------------
(CUSIP Number)
Amy Wang, Esq.
Bristol Capital Advisors, LLC
10990 Wilshire Boulevard, Suite 1410, Los Angeles, CA 90024
(310) 696-0333
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 28, 2008
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 007586100
- --------------------------------------------------------------------------------
1. Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
Bristol Investment Fund, Ltd.
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) ...............................................................
(b) ...............................................................
- --------------------------------------------------------------------------------
3. SEC Use Only..........................................................
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
Cash
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)..........................................................
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Cayman Islands
- --------------------------------------------------------------------------------
7. Sole Voting Power
294,834
------------------------------------------------------------------
8. Shared Voting Power...........................................
------------------------------------------------------------------
9. Sole Dispositive Power
294,834
------------------------------------------------------------------
10. Shared Dispositive Power......................................
------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
294,834
- --------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions).........................................................
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
5.0165%
- --------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
CO
- --------------------------------------------------------------------------------
2
<PAGE>
CUSIP No. 007586100
The following constitutes the Schedule 13D filed by the undersigned (the
"Schedule 13D").
ITEM 1. SECURITY AND ISSUER
This statement relates to the shares of common stock (the "Shares") of Advocat
Inc. (the "Issuer"). The address of the Issuer's principal executive offices is
1621 Galleria Boulevard, Brentwood, TN 37027.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed on behalf of all persons and entities and participants
of Bristol Investment Fund, Ltd., an entity organized under the laws of the
Cayman Islands ("Bristol"). Bristol is referred to herein as the "Reporting
Person."
Bristol is a privately held fund that invests primarily in publicly-traded
growth companies through the purchase of various securities in private placement
transactions. The address of Bristol's registered office is Caledonian Fund
Services (Cayman) Limited, 69 Dr. Roy's Drive, George Town, Grand Cayman, Cayman
Islands. Bristol Capital Advisors, LLC, an entity organized under the laws of
the State of Delaware ("BCA"), is the investment advisor to Bristol. Paul
Kessler is manager of BCA and as such has voting and dispositive power over the
shares held by Bristol.
During the last five years the Reporting Person has not been convicted in a
criminal proceeding, nor been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction, as a result of which it was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Bristol purchased 294,834 Shares for approximately $3,818,669 in cash.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Person acquired Shares to establish an investment position in the
Issuer. Subject to market conditions and other factors, the Reporting Person may
purchase additional Shares, maintain its present ownership of Shares or sell
some or all of the Shares.
On December 13, 2007, the Reporting Person submitted a Shareholder Proposal in
accordance with Rule 14a-8 of the Securities Exchange Act of 1934, as amended. A
copy of this proposal is filed as Exhibit 1 hereto and incorporated herein by
reference.
On February 1, 2008, the Reporting Person sent a letter to the Chief Executive
Officer of the Issuer. The letter is filed as Exhibit 2 hereto and incorporated
herein by reference. The letter addresses Bristol's concerns about corporate
governance, valuation of the Issuer's common stock, and the general direction of
the Issuer. The letter also urges the Issuer to take certain measures to address
Bristol's concerns and act in the best interests of all shareholders.
The Reporting Person reserves the right to communicate with the Issuer's board
of directors and management, communicate with the Issuer's shareholders directly
or through shareholder proposals, call a special meeting of shareholders,
communicate directly with potential acquirers of Issuer, purchase additional
Shares, sell some or all of its Shares, nominate candidates for election to the
board of directors, or change its intention with respect to any and all matters
referred to in this Item 4.
3
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date of the filing of this Schedule 13D, Bristol owns
294,834 Shares, which represents approximately 5.0165% of the
Shares outstanding, based upon 5,877,287 Shares outstanding as of
November 1, 2007 as reported in the Issuer's quarterly report on
Form 10Q, as filed with the Securities and Exchange Commission on
November 6, 2007.
(b) Paul Kessler, as manager of the investment advisor to Bristol, has
power to vote and dispose of the Shares owned by Bristol, but Mr.
Kessler disclaims beneficial ownership of the Shares owned by
Bristol.
(c) Schedule A annexed hereto lists all transactions in the Shares
during the last sixty days by the Reporting Person. All such
transactions were effected in the open market.
(d) No person other than the Reporting Person is known to have the
right to receive, or the power to direct the receipt of dividends
from, or proceeds from the sale of, the Shares.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Other than as described herein, there are no contracts, arrangements,
understandings or relationships between the Reporting Person and any other
person, with respect to the securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Shareholder Proposal, submitted December 13, 2007.
2. Letter to Chief Executive Officer, dated February 1, 2008.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: February 4, 2008
BRISTOL INVESTMENT FUND, LTD.
By: /s/ Paul Kessler
<PAGE>
SCHEDULE A
Transactions in the Shares During the Past 60 Days
(executed on the open market by Bristol Investment Fund, Ltd.)
Date Transaction Shares of Common Stock Price per Share ($)
- --------------------------------------------------------------------------------
01/28/08 Buy 12,270 $10.96710
<PAGE>
EXHIBIT 1
BRISTOL INVESTMENT FUND LTD.
c/o Bristol Capital Advisors, LLC
10990 Wilshire Blvd, Suite 1410
Los Angeles, CA 90024
December 13, 2007
BY E-MAIL, FACSIMILE AND EXPRESS MAIL
- -------------------------------------
ADVOCAT, INC.
1621 Galleria Blvd.
Brentwood, TN 37027
Dear Sir:
Bristol Investment Fund, Ltd. ("Bristol") is submitting the attached resolution
and supporting statement for inclusion in the proxy statement of Advocat, Inc.
("AVCA") relating to the next annual meeting of stockholders of AVCA. The
resolution and supporting statement attached hereto as Exhibit A request that
the stockholders of the Corporation recommend that the Board of Directors
promptly engage an investment-banking firm and pursue a sale or liquidation of
the Corporation.
As of the date hereof, Bristol is the beneficial owner of 282,564 shares of
common stock of AVCA and intends to hold such shares through the date of the
next annual meeting of stockholders. The shares are held in Bristol's brokerage
account with Citigroup Global Markets Inc. (DTC Participant No. 0418). Cede &
Co., as the nominee of The Depository Trust Company, is the holder of record of
the shares. As of the date hereof, Bristol has continuously held at least $2,000
in market value of AVCA's securities entitled to be voted on the proposal for at
least one year, as evidenced by the letter from Citigroup Global Markets Inc.
attached hereto as Exhibit B.
Bristol's representatives will appear in person or by proxy to bring the
resolution before the meeting. This notice is submitted in accordance with Rule
14a-8 of the Securities Exchange Act of 1934, as amended. We assume the attached
resolution and supporting statement will be included in AVCA's proxy material
for its next annual meeting of stockholders unless Bristol is advised otherwise
in writing. Should you have any questions regarding this matter, please call the
undersigned at (310) 696-0333.
BRISTOL INVESTMENT FUND LTD.
By: /s/ Paul Kessler
------------------------------------
Name: Paul Kessler
Title: Principal
Bristol Capital Advisors LLC
cc: Thomas J. Fleming
<PAGE>
EXHIBIT A
---------
Stockholder Proposal
- --------------------
RESOLVED, that the stockholders of the Corporation
recommend that the Board of Directors promptly engage an
investment banking firm and pursue a sale, or liquidation of the
Corporation.
Supporting Statement
- --------------------
We believe that the inherent value of the Company exceeds the market value of
its shares. In a conference call with investors in 2007, the Company's
management expressed a similar view, announcing a share buyback program. It is
our opinion, however, that the best way for the Company's shareholders to
receive a fair return on their investment would be through the retention of an
investment banking firm to explore the possible sale of the Company, either to a
financial acquirer or a strategic buyer. In our judgment the Company lacks
sufficient size to operate as a public Company and would benefit from insurance
and other cost savings as part of a larger entity, or through private ownership.
From 2003 to 2006, the compensation of the Company's CEO grew from $313,000 to
more than $1.8 million; over this same period, the CFO's compensation grew from
$159,000 to more than $1.1 million. Since reaching $21 per share in November
2006, the Company's share price has declined to $10.88, the closing price on
December 12, 2007. This trend speaks volumes. We believe the Company is
currently being run for the benefit of management, not its true owners, the
shareholders.
We urge shareholders to vote FOR this proposal.
<PAGE>
EXHIBIT 2
February 4, 2008
VIA FACSIMILE AND FEDERAL EXPRESS
- ---------------------------------
Mr. William R. Council, III
President and Chief Executive Officer
Advocat Inc.
1621 Galleria Boulevard
Brentwood, Tennessee 37027
Dear Mr. Council:
As you know, entities advised by Bristol Capital Advisors, LLC
beneficially own approximately 294,834 shares of Advocat, Inc. (the "Company"),
representing approximately 5% of the outstanding stock. Our initial investment
was made in 2006. We have been patient, long-term shareholders. We are writing
to you following a series of letters and conversations in which we have made
several requests, which remain unanswered. We are concerned that the Company's
management and board of directors have not fully aligned its interests with the
Company's true owner, its shareholders.
Our greatest concerns involve the Company's deficiencies in corporate
governance, which raise the question whether management's true goal is to
entrench itself to the detriment of the Company's shareholders. These concerns
are heightened by the fact that the Company's board of directors (the "Board")
(outside of Wallace Olsen) has virtually no investment in the Company's stock,
and the Company's Chairman, Wallace Olsen, has been a seller of his shares. Our
investment in the Company was and continues to be based on what we believe is a
large discount between stock market value and underlying asset value, as well as
the great opportunities that exist in the senior living industry.
Our review of your corporate governance suggests that you and the Board
have acted and continue to act primarily to preserve your positions with the
Company, rather than in the best interest of the shareholders. Among other
things, the Board has issued Employment Agreements with "change in control"
provisions that are punitive and it has declined to nominate any significant
institutional shareholders to its Board. The 2007 Proxy disclosed that the
aggregate compensation of the three senior managers exceeded $3.8 million, a
dramatic increase from earlier years. Again we ask you and the Board to align
your interests with those of the Company's shareholders while at the same time
fulfill your fiduciary responsibility by taking the following corporate actions:
1. Submit to a binding shareholder vote, the issues whether there
should be a de-staggering of the Board so that it is composed of
one class of directors.
2. Nominate two Board members that represent institutional
shareholders or expand the Board to appoint them.
3. Present a binding resolution to shareholders to vote on whether to
redeem the rights issued under the Company's poison pill.
4. Decline to renew any and all golden parachutes, thereby aligning
management's interests with those of the Company's shareholders.
<PAGE>
Mr. William R. Council
Advocat Inc.
February 4, 2008
Page 2
5. Revise the current Board's compensation, which should be
significantly reduced and paid in restricted stock and/or cash,
thereby aligning the Board's interests with those of the Company's
shareholders.
6. Hire a credible investment bank to review alternatives to enhance
shareholder value, including an immediate stock buyback and the
elimination of acquisitions unless such acquisitions trade at a
more favorable valuation than the Company's common shares.
It remains our belief that taking the responsible steps outlined above will
garner credibility with current shareholders, prospective shareholders, and more
importantly institutional investment funds.
Yours truly,
/s/ Paul Kessler
Paul Kessler
Manager
BRISTOL CAPITAL ADVISORS, LLC
(310) 696-0333 x110
</TEXT>
</DOCUMENT>
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