Friday, March 23, 2018

Six Days to Go for Shareholder Vote


Strange Tony,

Battle lines are drawn as Kindred's Board and senior executives push for approval of the $9 per share buyout while investor Brigade Capital fights to kill the proposed deal.  Each side enlisted proxy advisors to support their case.  Brigade has one final legal challenge to postpone the March 29 shareholder vote.  It will be heard Tuesday March 27.

Kindred has 91 million shares with a float of nearly 88 million.  Nearly 95% of Kindred shares are held by institutions.  Insiders control 4% of Kindred stock.

The buyout fight escalated such that Brigade Capital is calling for reconstituted leadership, both executive and board.  Brigade noted details are missing on Kindred executive change in control compensation and employment contracts with new owners.  This information is absent from public view.  Executives often roll over a portion of their golden parachute into a higher equity stake in the newly private company.

This fight will intensify as the days tick down to Thursday, March 29, 2018.  If Kindred executives lose the vote their days may be numbered.  Brigade is in it solely for the money.  It is the battle of the greediest.

Kindred's growth story can be seen in the following data:


Kindred's ever shrinking employee group loses either way.  Neither side has appealed to people doing important daily work by offering substantive strategies.  Neither shared their plans to make Kindred a wage leader, much less compensation competitive. 

Over a five year period Humana can buyout the two private equity firms at a 35 to 44% premium to the 8x EBITDA multiple being offered to KND shareholders in the $9 a share offer.

After the proxy vote shareholders may learn how much Kindred's board paid executives in 2017 for further shrinking the company.  Executive compensation was not included in the company's 10-K or any of the numerous DEF filings on the proposed buyout.  Kindred CFO Stephen Farber offered in April 2017.

The first quarter of the year is always our softest cash quarter, as we have significant outflows from annual incentive compensation payments across the enterprise.

What do the board and senior executives have to hide by not revealing leadership pay before the sellout vote?

How does a competent board reward an executive team that drove down equity by 76% so corporate raiders could take out the company at a deep discount?

As the vote nears Kindred trickled out more information on the role of TPG Senior Advisor and Kindred board member Dr. Sharad Mankusani, who played a greater part than filings initially indicated.

Just before Kindred President Ben Breir played matchmaker between Humana and TPG the proposed buyout range was $11.00 to $13.00 per share, which is in the ballpark of 10x to 11.5x EBITDA.  It's not clear why TPG and WCAS deserve this pricing and shareholders do not.

Anonymous

Thursday, March 15, 2018

Roadmap to KND Sellout


Strange Tony,

Two weeks after the Ides of March Kindred shareholders will vote for or against the leveraged buyout by two private equity firms, a Canadian pension and Humana.  Oddly, Kindred stock again trades at a premium to the buyout price of $9 per share.

Major shareholder Brigade Capital sued to block the leveraged buyout takeover.  The next day KND stock closed at $9.45 per share, a 5% premium to the negotiated deal.  It closed today at $9.35.

Brigade Capital seeks injunctive relief prohibiting the shareholder vote.  Kindred management and board vigorously defend their long term equity decimation with both the stock price and company's balance sheet.

The vote will occur on March 29, 2018.  Kindred's recent 10-K had this to say regarding executive pay:

Executive Compensation  ---  Information required by this item will be provided by an amendment to this Annual Report on Form 10-K containing the applicable disclosures within 120 days after the end of the fiscal year covered by this report. 
The amendment could be provided as late as April 30, 2018, one month and a day after the shareholder vote.   Generic Hospice is not the only source who believes the deal is the floater in the Country Club pool.

Institutions and insiders will decide the deal.  Employees are the fly at the end of the bamboo cane pole.  Prepare to be whipped around and eaten by financial types, the fishy kind.

Anonymous (from the Kindred employee pool)

Tuesday, March 6, 2018

Shareholders Vote this Month on Complex Kindred Sellout


Strange Tony,

Kindred executives want employees to believe investment bankers developed the complex transaction for our benefit.  That is absurd on its face.   Yes, President Ben Breier offers hollow thanks to employee partners at the beginning of each quarterly earnings call.  After that salutation labor is only mentioned as a cost to control.  

A financial advisor discussed "with the Board the Board’s fiduciary duties in connection with a potential sale of Kindred and the differing incentives that senior management may face if Kindred pursued a transaction with a private equity buyer as compared to a strategic buyer."

Kindred's moving forward is for the benefit of the board and senior executives, not employees.  Humana's CEO stated future cash flow will be used for acquisitions with nary a mention of employee raises.   Somehow Humana needs to pay 2.5x to 3.5x more EBITDA for 60% of Kindred at Home to two private equity firms for a few years of ownership.

President David Causby and senior executives will participate in this premium exchange through their equity holdings in a private Kindred at Home.  Humana executives led by example by goosing profits to maximize recent bonuses.  Our future owner used atypical accounting to juice executive pay.  Greed is as greed does at both Kindred and Humana.

Employees are but numbers to TPG Capital, WCAS and Humana.  They won't know us for the work we do, for the care we provide, or for our hospice staff's heartfelt dedication.  New words have been spoken at our hospice.  They will know us by our numbers.  Executives will be handsomely enriched on our backs.

Breier and Causby did not partner with employees to take the company private.  They partnered with financial rapscallions for their benefit.  

Anonymous (a real person inside Kindred)