StoneMor Partners announces recapitalization transactions and strategies

Foundation Partners why I partnered

If you follow the death care industry you would know that it is no secret that the long-term viability of StoneMor Partners has been in question.  Since 2016 their publicly traded stock has dropped from over $25 per share to a low last week of $1.44 per share.  In 2017 and 2018 alone the company lost over $75 million in operating income and revenues have dropped from about $338 million in 2017 to $316 million in 2018.  In addition, the dividend that was paid annually to investors of $2.58 per share a couple of years ago has been eliminated.

Last week the company announced transactions that are hoped to get StoneMor to stable footing underneath them.  They announced a placement of $385 million of secured debt due in 2024 and other financing efforts meant to help the company.  They also made changes to the Board of Directors including naming Andrew Axelrod, Managing Partner of Axar Capital, as a board member and chairman.  You can read about these transactions here.

You can also find a summary of the situation and strategy of what StoneMor Partners will try to accomplish in this power point presentation.  From my point of view it appears that their strategy, with their over 400 funeral and cemetery properties, may be to consolidate their efforts on their top performing 250-300 properties and then, after careful deliberation, either mitigate losses in, or possibly divest of their other 150 or so properties.

There is no doubt that the current “turn-around” team at StoneMor Partners has been dealt a tough hand.  And, just the nature of the death care business – death is not an everyday transaction for consumers – makes for some variables that are not part of a general retail or banking turnaround.  Added to this dilemma is that death care business model is changing rapidly and revitalizing 400 or so properties in the “old death care world” while at the same time trying to be relevant in the “new death care world” may be a precarious venture.

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