Advocat Inc. (AVCA), a U.S. provider of nursing-home services, should hire a financial adviser to start auction proceedings and begin a stock-repurchase program, shareholder Bristol Investment Fund said.
Bristol, which owns 4.4 percent of Advocat shares, urged the company to create a special committee of directors to consider buyout offers, according to a regulatory filing by Brentwood, Tennessee-based Advocat. The filing includes a letter from Bristol manager Paul Kessler to Advocat Chief Executive Officer William Council.
The fund wants to nominate two board members and questioned why Chairman Wallace Olson is stepping away from his role as the public face for the company.
``We're concerned about the direction of the company when the chairman doesn't want to be spokesman anymore,'' said Amy Wang, attorney for Bristol Capital Advisors LLC, which manages the fund.
A call to Council by Bloomberg News wasn't immediately returned.
Bristol wants the company to focus on a share buyback, rather than expanding its services, Kessler wrote in the letter. Advocat said earlier this month that it plans to acquire a nursing home in West Virginia and to renovate at least three of its other sites this year.
Fourth-quarter net income fell to $2.36 million, or 37 cents a share, from $17.9 million, or $2.75, a year earlier on lower income tax benefits, Advocat said March 1.
Advocat shares rose 29 cents to $11.37 as of 3:58 p.m. New York time in Nasdaq Stock Market composite trading. They gained 49 percent in the last year before today, though they have fallen 35 percent since March 1.
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