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
"Brigade is in it solely for the money. It is the battle of the greediest." I disagree with your usual spot on analysis here, Mr. Strange Tony. ANYONE who invested in KND below $9 is in the same boat including thousands of ex-Gentiva employees who invested in the employee friendly ESPP at prices well above the $19.25 KND buyout price and were forced to accept $19.25 KND shares for 25% of their balances (now worth $9). Many if not all got slammed with taxes on the 75% cash portion and held onto the stock hoping for better days near retirement. This buyouts are like suicides, a permanent solution to a temporary problem. Executive's grants and options don't have this basis. I'm praying Brigade prevails!!
ReplyDeleteHedge fund -- a limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains.
ReplyDeleteIt's a sad day when employees have to rely on a hedge fund to represent our interests, as current Kindred management does not. The enemy of my enemy is my friend thinking gets us into bad places.
My hospice coworkers love the work they do and deserve far better leadership than Kindred currently provides. As for the current fight over ownership we have to render unto Caesar that which is Caesar's. Employees are but pawns in this high stakes Wall Street game.
Six days got stretched by a Delaware Court to twelve days. Voting will go until April 5, 2018 when the special board/shareholder meeting reconvenes. The SEC filing says it includes information about board members and executives interest in the buyout but much information is missing. There is no information on executive compensation for 2017. The filing is silent on executive contracts negotiated during the buyout process. It is silent on conflicted board members and their future role with the company. Full disclosure? The company's core value in this process has been "Take Care of Our Executives." Employees warrant hardly a mention.
ReplyDeleteKindred stock traded today like the buyout is a done deal. Kindred employees, brace yourself.
ReplyDelete