Sonida Senior Living, Inc. · NYSE:SNDA
Sonida Senior Living — Capital Senior Living — Proxy Contest (October 2021)
39 slides from Sonida Senior Living's proxy contest presentation, Oct 5, 2021
Slide 1: Investor Presentation: The Right Path Forward for CSU
Investor Presentation: The Right Path Forward for CSU October 2021Investor Presentation: The Right Path Forward for CSU October 2021
Slide 2: Table of Contents
Table of Contents Executive Summary I 3 Overview of the Amended Strategic Investment from Conversant and Proposed II 9 Rights Offering The Right Amount of Capital, Priced Appropriately, at the Right Time III 16 A Sound Strategic Alternatives Process IV 21 Ortelius’ Campaign V 33 2Table of Contents E
Slide 3: Executive Summary
Executive Summary wt DISGOVER theldifference
Slide 4: Executive Summary
Executive Summary CSU has an urgent need for new capital to meet its immediate working capital and liquidity needs, address its “going 1 concern ” issues and fund future value creation. A failure to approve the Amended Transactions will leave the Company with 1. insufficient cash to meet its near-te
Slide 5: CSU: A Leading Operator of Seniors Housing and Services
CSU: A Leading Operator of Seniors Housing and Services 68 30+ 77.8% 6,000+ Communities 3,200+ 3 Year History Residents YTD 2021 Avg Occupancy Employees 60 Owned 60 owned communities Served 8 Managed 1,2 1 Attractive Markets and Resident Demographic Attractive Private Pay Focus 15+ Communities 6,881
Slide 6: How We Got Here
How We Got Here (1) Long-Standing Senior Housing Industry Challenges • The senior housing industry has experienced long-standing Construction Starts, Primary Markets challenges which strained operating fundamentals: 18,000 • Significant new supply growth which decreased 15,000 occupancy levels acros
Slide 7: Strategic Actions Undertaken Since 2018
Strategic Actions Undertaken Since 2018 Capital Senior Living took a range of aggressive and significant steps aimed at right-sizing the portfolio, improving operational and financial performance, and repositioning the business for long-term success New Senior Leadership Team CEO, COO, Chief Revenue
Slide 8: The Industry Outlook is Improving – But Remains Challenged
The Industry Outlook is Improving – But Remains Challenged • The senior housing sector has likely passed the lowest point of the COVID-19 pandemic – but the crisis is NOT behind us • The industry operating environment has changed but not improved. The Delta variant has contributed to significant lab
Slide 9: Overview of the Amended Strategic Investment from Conversant and Proposed Rights Offering
Overview of the Amended Strategic Investment from Conversant and Proposed Rights Offering 9Overview of the Amended Strategic Investment from Conversant and Proposed Rights Offering 9
Slide 10: The Amended Transactions are the best path forward
The Amended Transactions are the best path forward and make strong strategic and financial sense for the Company 10
Slide 11: Amended Transactions Summary
Amended Transactions Summary • $154.8 million capital raise through the $82.5 million private placement of convertible and common stock to Conversant Investment Capital (“Conversant”) and a $72.3 million common stock rights offering to existing shareholders Summary (1) • Incremental $25 million acco
Slide 12: Benefits of the Amended Transactions
Benefits of the Amended Transactions Significantly Improved Terms and Structure Enhance Alignment with Shareholders Prior Transaction Terms Revised Transaction Terms Certainty of Proceeds Fully backstopped rights offering by Conversant and Arbiter along with the (1) (1) 1 • $125 million to $152.5 mi
Slide 13: Pro Forma Capital Structure
Pro Forma Capital Structure The Amended Transactions significantly enhance the capital structure and position the Company for future growth Pro Forma Capital Structure ($MM) • The Amended Transactions represent a major step in 745 745 rightsizing the Company’s capital structure 72 172 • The Company
Slide 14: Rights Offering Allows for Meaningful Shareholder Participation
Rights Offering Allows for Meaningful Shareholder Participation Common Shareholders Have the Opportunity to Join Deal and Retain Controlling Ownership ü For each share currently owned, common shareholders have the right to purchase 1.1 shares at a purchase price of $30.00 per share ü Raises approxim
Slide 15: Strategic Rationale For the Size and Structure of Transactions
Strategic Rationale For the Size and Structure of Transactions See Forwarding Looking Statements Disclaimer 15Strategic Rationale For the Size and Structure of Transactions See Forwarding Looking Statements Disclaimer 15
Slide 16: The Right Amount of Capital, Priced Appropriately, at the Right Time
The Right Amount of Capital, Priced Appropriately, at the Right Time 16The Right Amount of Capital, Priced Appropriately, at the Right Time 16
Slide 17: This is the level of capital the Company needs
This is the level of capital the Company needs, it is appropriately priced given the existential risks to the business and it has to be now 17
Slide 18: Why Does CSU Need New Capital NOW?
Why Does CSU Need New Capital NOW? Immediate Working Capital and Liquidity Needs Urgent Liquidity Needs… • CSU’s liquidity position has declined significantly over recent years; without Liquidity deterioration began prior to COVID and has accelerated since new capital, we cannot fund our near-term c
Slide 19: Why Does CSU Need THIS MUCH New Capital?
Why Does CSU Need THIS MUCH New Capital? • Total deal sized to cover necessary near-term needs and provide sufficient financial flexibility to emerge from COVID-19 in a position of strength • Revised transaction structure provides us certainty of proceeds with a smaller portion in the form of conver
Slide 20: CSU Needs Significant Capital to Maintain Current Positive Momentum
CSU Needs Significant Capital to Maintain Current Positive Momentum • COVID-19 pandemic has had a material impact on senior housing operations throughout the industry • Capital Senior Living continues to outperform peers in this challenging environment, with a less pronounced occupancy decline throu
Slide 21: A Sound Strategic Alternatives Process
A Sound Strategic Alternatives Process 21A Sound Strategic Alternatives Process 21
Slide 22: The Amended Transactions are the result of a well-conducted process
The Amended Transactions are the result of a well-conducted process that reflects shareholder input 22The Amended Transactions are the result of a well-conducted process that reflects shareholder input 22
Slide 23: A Board of Directors with Highly Relevant and Diversified Expertise
A Board of Directors with Highly Relevant and Diversified Expertise Ed Grier E. Rodney Hornbake, M.D. Philip Brooks Dean of the Virginia Commonwealth Consultant to various hospitals, Principal investor & managing partner for University School of Business medical groups and law firms Select Living LL
Slide 24: The Transaction Committee: the Right Markets and Sector Experience
The Transaction Committee: the Right Markets and Sector Experience • In July 2019, the Board formed a Transaction Committee to lead the exploration of capital raising and financing alternatives • These individuals were chosen for their range of experience in the senior housing, real estate and finan
Slide 25: Process Overview
Process Overview • The Board engaged in a multi-year effort to identify the best path for the Company • There were two lengthy processes over two years, led by the Transaction Committee (along with Morgan Stanley), run between July 2019 and July 2021 • A wide range of options were examined – with a
Slide 26: 2019 – A Private Placement Explored with No Success
2019 – A Private Placement Explored with No Success In July 2019, the Transaction Committee was formed and by November, Morgan Stanley was engaged to assist the Company in a potential private placement of its securities Morgan Stanley commenced outreach to 18 potential investors and engaged in explo
Slide 27: February 2019 – Operational Improvement Plan Implemented
February 2019 – Operational Improvement Plan Implemented to Improve Financial Positioning • As a result of the 2019 process, the Company determined it would immediately address certain of the concerns cited by potential investors while continuing to execute its strategic plan in order to position it
Slide 28: 2021 – Strategic Transaction Process Revisited
2021 – Strategic Transaction Process Revisited From January 2021 through July 2021, the Transaction Committee, along with Morgan Stanley, met 11 times to discuss the status of the process and review terms of potential transactions Beginning in January 2021, Morgan Stanley contacted 33 potential inve
Slide 29: 2021 – Strategic Transaction Process Revisited (cont’d)
2021 – Strategic Transaction Process Revisited (cont’d) The Company did not grant exclusivity to any potential investor during process so as to preserve ability to speak with any and all bidders at any point. The process effectively continued until July 22, 2021, with the execution of a definitive a
Slide 30: Financing Alternatives Process Has Allowed the Board to Consider All Paths Forward
Financing Alternatives Process Has Allowed the Board to Consider All Paths Forward The Company has exhaustively pursued refinancing alternatives for the near-term debt maturities through a robust and extensive process which remains ongoing • Engaged Greystone Real Estate Finance, a top-ranked nation
Slide 31: This is the Best Go Forward Option
This is the Best Go Forward Option After discussions with its advisors, the Board determined none of the alternatives were viable at this time due to: Near term insolvency risk and the inability to invest in the business if the status quo was maintained Constrained ability to make investments in the
Slide 32: Shareholder Engagement Throughout the Process
Shareholder Engagement Throughout the Process • The Board spoke with significant shareholders throughout the strategic review process after the Transactions were announced and during the development of the Amended Transactions Silk Partners • The Company and Conversant engaged constructively with tw
Slide 33: Ortelius’ Campaign
Ortelius’ Campaign 33Ortelius’ Campaign 33
Slide 34: Ortelius’ campaign ignores the reality of the Company’s financial position
Ortelius’ campaign ignores the reality of the Company’s financial position, the sound process that was conducted and the benefits of the deal with Conversant 34Ortelius’ campaign ignores the reality of the Company’s financial position, the sound process that was conducted and the benefits of the dea
Slide 35: Ortelius Has Not Made a Real Offer
Ortelius Has Not Made a Real Offer • Ortelius has not articulated any actionable terms or evidence of their ability to provide the necessary capital • Nowhere in Ortelius’ press releases or 40-page presentation does Ortelius provide additional details on its “offer” • CSU cannot rely on the promise
Slide 36: CSU Tried Repeatedly to Engage with Ortelius
CSU Tried Repeatedly to Engage with Ortelius Prior to and Leading Up to the Amended Transaction • The CSU Board and management have engaged with Ortelius in good faith • Over the past several months, CSU held numerous calls with Peter DeSorcy, managing member, CIO and co- founder of Ortelius – many
Slide 37: Contact Information
Contact Information Your vote at the upcoming Special Meeting is critical to the future success of Capital Senior Living and to protecting your investment. Vote FOR the Amended Transactions on the WHITE proxy card today. 37Contact Information Your vote at the upcoming Special Meeting is critical to
Slide 38: Forward-Looking Statements & Non-GAAP Financial Measures
Forward-Looking Statements & Non-GAAP Financial Measures Forward Looking Statements The forward-looking statements in presentation are subject to certain risks and uncertainties that could cause the Company’s actual results and financial condition to differ materially, including, but not limited to,
Slide 39: Important Information
Important Information No Offer or Solicitation /Additional Information and Where to Find It This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor will there be any sale of any securities in any state or other jurisdiction in which such offe