StoneMor Board, Axar Capital allegedly sued over 2020 buyout proposal

Foundation Partners why I partnered

From my point of view, the new management and leadership team at StoneMor, Inc. has been executing with all the right decisions to get the Pennsylvania funeral home and cemetery based operator moving forward in a profitable direction.  They have made tough decisions in contracting out cemetery labor, removing it from a direct employee relationship to save money.  They have divested selective funeral homes, mostly on the United States west coast, to bring in capital and pay down debt with that capital.

StoneMor, Inc. has moved the company to where they are physically located in the eastern half of the United States in order to consolidate expenses and become more efficient.  Their last quarterly financial report showed that they are also moving the needle forward to profitability.  And, the stock price has moved from a low of $ 0.45 per share on March 5, 2020, to a closing price of $ 2.54 per share on December 24, 2020.  The rise in that stock price has allowed StoneMor to retain its New York Stock Exchange listing and, maybe more importantly, provided a share price growth multiple of 5.6x to stockholders from March 5 to December 24, 2020.

Much of the success rests with management but also with the capital investment infusion of Axar Capital and it’s CEO Andrew Axelrod.

You might also remember that back in August, Axar Capital made a motion to purchase all of the outstanding shares of the StoneMor Inc. common stock and take the company private.  You can read about that in this Funeral Director Daily article and in this Globe Newswire release from that time.  Eventually, Axar Capital withdrew that buyout offer.

We learned late last week that Axar Capital and the StoneMor Inc. Board of Directors was allegedly sued in Delaware Chancery Court over that issue.  This partial article from Bloomberg Law states that the lawsuit claims “Axar Capital Management LP . . . tried to use the Covid-19 pandemic as an excuse to take StoneMor, Inc. private at a bargain price so it could use the cemetery owners very large trust funds to rescue other companies in its private equity portfolio.”

Funeral Director Daily will continue to follow this development if and when more information comes available.

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