Brigade Corrects Inaccuracies in Kindred Healthcare’s (KND) Press Release, Urges Shareholders to Take Advantage of Court-Or...
28 Marzo 2018 - 3:34PM
Business Wire
Over Kindred’s Strong Objection, Court
Orders Vote to be Postponed Five Days or Extended Five Days to
Protect Shareholders’ Legal Rights
Brigade Capital Management, LP (“Brigade”), on behalf of funds
managed by it, today responded to yesterday’s press release by
Kindred Healthcare, Inc. (NYSE: KND) (“Kindred” or the “Company”)
to correct what Brigade views as misleading statements by Kindred.
Brigade believes Kindred’s shareholders deserve better and should
vote “NO” to the proposed acquisition of the Company by a
consortium of Humana, TPG Capital and Welsh, Carson, Anderson &
Stowe.
Kindred’s March 27, 2018 press release states that the Delaware
Court of Chancery “denied all of the relief Brigade sought” in its
application to postpone Thursday’s shareholder vote on the proposed
acquisition. This is simply false. The Court granted
Brigade’s application that shareholders be given more time to
protect their legal rights in connection with this vote. As a
result of Brigade’s efforts, voting is Court-ordered to remain open
from 10:00 a.m. this Thursday, March 29, 2018, until next Thursday,
April 5, 2018. Brigade believes that this ruling provides
shareholders with additional time to review important new
disclosures (which were inserted by the Company only after Brigade
highlighted to the Court material misstatements in prior proxy
materials), and vote “NO.”
Kindred shareholders now have an extra week to evaluate the
merits of the proposed transaction. We believe that this is a
terrible deal for shareholders from any angle. With the extra week,
we urge all shareholders to carefully consider that:
- Glass Lewis agrees with Brigade that
shareholders should vote “NO.”
- ISS believes that “the acquirer group
has the potential to earn a substantial return on its investment”
and the “Board could have negotiated a better deal [for]
shareholders,” and has highlighted concerns over the sales process
and lack of premium being offered to shareholders.
- Serious conflicts of interest were not
properly managed. The proxy materials state that a Board member who
also happens to be a Senior Advisor to TPG was recused from
critical May 24-25 and August 1, 2017 Board meetings, and that this
conflicted director “was not given access to materials related to
the transaction.” Kindred has now admitted in open court that this
conflicted director received and reviewed unredacted copies
of minutes from those meetings, in which the transaction was
discussed in detail.
- Kindred knew that its conflicted
director continued to have access to unredacted Board materials,
including the minutes from the meetings post-dating his recusal.
Without adequate conflict-management procedures in place, Kindred’s
shareholders are forced to rely on self-serving statements from a
conflicted director that the process was not tainted.
- Management lowered the projections used
for the fairness opinion analyses after the $9 deal price was set
and management began negotiating their go-forward employment
contracts.
- The Board never – not once – tried to
secure a price increase from the buyer group after CMS did not
finalize its controversial HHGM reimbursement proposal, removing a
significant headwind that was in fact a basis for the buyer group
to lower its bid for the Company. We simply cannot get our heads
around this fact.
- The $9 per share price does not
consider the significantly improved regulatory and tax environment,
which Kindred’s own financial advisors illustrate will drive
substantial improvement in the Company’s Unleveraged Free Cash
Flow.
- Publicly traded market peers have
enjoyed meaningful value appreciation since the transaction was
announced in December.
- We believe Brigade is not alone with
these concerns, and actions speak louder than words. Since
mid-December when the transaction was announced, well over 100%
of shares outstanding have traded above $9.00, and less than 4% of
the overall volume has traded below $9 per share.1
We believe that each of these facts standing alone should be
enough to give shareholders pause. Collectively, this set of
circumstances demonstrates to us that the Board and management have
rolled over and played dead, and seem prepared to shortchange the
Company’s existing owners for the benefit of the buyer group and
go-forward employment opportunities for members of senior
management.
We find these actions impossible to square with the Board’s and
senior management’s duties to the owners of the Company, and we
believe Kindred’s existing shareholders deserve better. Brigade
intends to vote “NO” on the proposed transaction. We believe that
the Company is well positioned to create significant incremental
value for its customers, employees and shareholders if it can put
this disastrous transaction behind it and take advantage of its
strong core businesses and improved regulatory environment.
About Brigade Capital Management, LP
Brigade Capital Management, LP is an SEC-registered investment
advisor focusing on investing in the global high-yield market and
levered equities. The firm was founded in 2006 and is managed by
Donald E. Morgan, III, CIO and Managing Partner. The firm is
headquartered in New York City with offices in the United Kingdom,
Japan and Australia. The firm employs a multi-strategy, multi-asset
class investment approach focused on leveraged balance sheets. The
core strategies include long/short credit, distressed debt, capital
structure arbitrage and levered equities. Brigade Capital
Management, LP’s investment process is fundamentally driven,
focusing on asset coverage and free cash flow, with an emphasis on
capital preservation. The team possesses deep sector expertise
throughout the entire leveraged finance market and has extensive
experience in capital restructurings and bankruptcy
reorganization.
______________________1 Based on Brigade’s analysis of share
volumes at various prices provided by Bloomberg data services.
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Sard Verbinnen & Co.Paul Scarpetta, 212-687-8080
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