Why Axar Capital Likes Stonemor

PURPOSE OF TRANSACTION       The Reporting Persons originally acquired the Common Units for investment in the ordinary course of business because they believed that the Common Units, when purchased, were undervalued and represented an attractive investment opportunity.       The Reporting Persons intend to actively pursue discussions with the Board of Directors and/or management of StoneMor GP LLC, the general partner of the Issuer (the “General Partner”) regarding the potential of converting the Issuer’s structure from a master limited partnership into a Subchapter C corporation for U.S. Federal income tax purposes, including through or together with transactions in which the Reporting Persons may seek to participate. The Reporting Persons believe that the recent  reductions of corporate tax rates effective for 2018  make the conversion of the Issuer into a C corporation more attractive than under prior tax rates.

The Reporting Persons also believe that a conversion of the Issuer into a Subchapter C corporation, together with addressing the Issuer’s incentive distribution rights, would result in a more liquid market for the Issuer’s equity securities, improving the Issuer’s opportunities for capital raising, senior management recruitment and other strategic transactions.

The Reporting Persons may also engage in discussions with management and the Board of Directors of the General Partner, other shareholders of the Issuer and other relevant parties, including representatives of any of the foregoing, concerning the Reporting Persons’ investment in the Common Units and the Issuer, including, without limitation, matters concerning the Issuer’s legal form, business, operations, governance, management, capital raises and strategic plans. The Reporting Persons may exchange information with any persons pursuant to appropriate confidentiality or similar agreements or otherwise, work together with any persons pursuant to joint agreements or otherwise, and may propose changes in the Issuer’s legal form, business, operations, governance, management, capitalization or strategic plans, or propose or engage in one or more other actions set forth under subparagraphs (a)-(j) of Item 4 of Schedule 13D.

The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors, including, without limitation, the outcome of any discussions referenced above, the Issuer’s financial position and strategic direction, actions taken by the General Partner’s  management or Board of Directors, price levels of the Common Units, other investment opportunities available to the Reporting Persons, conditions in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate, including, without limitation, acquiring additional Common Units and/or other equity, debt, notes, instruments or other securities of the Issuer (collectively, “Securities”) or disposing of some or all of the Securities beneficially owned by them, in public market or privately negotiated transactions; entering into financial instruments or other agreements that increase or decrease the Reporting Persons’ economic exposure with respect to their investment in the Issuer and/or otherwise changing their intention with respect to any and all matters referred to in Item 4 of Schedule 13D.

Except as set forth herein, the Reporting Persons have no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D.

Link: https://www.sec.gov/Archives/edgar/data/1286131/000090266418001557/0000902664-18-001557-index.htm


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