Page 9 of 18 – SEC Filing
Explanatory Note
This Amendment No. 3 (“Amendment
No. 3”) relates to the common stock, par value $0.25 per share (the “Common Stock”), of Kindred Healthcare, Inc.
(the “Issuer”). This Amendment No. 3 amends and supplements the Statement on Schedule 13D filed with the Securities and
Exchange Commission (the “SEC”) on December 27, 2017 (the “Initial Schedule 13D”), as amended and supplemented
by Amendment No. 1, filed February 1, 2018 (“Amendment No. 1”), and Amendment No. 2, filed March 9, 2018 (“Amendment
No. 2”). The Initial Schedule 13D, as amended and supplemented by Amendment No. 1, Amendment No. 2 and this Amendment No.
3, is referred to herein as the “Schedule 13D.” Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Schedule 13D. Except as otherwise provided herein, each Item of the Schedule 13D remains
unchanged.
Item 3. Source and Amount of Funds
or Other Consideration
Item 3 of the Schedule 13D is hereby
amended by adding the following:
DSTR used approximately $3,688,710.90
(excluding brokerage commissions) of the working capital of DSTR to purchase the shares of Common Stock reported in this Amendment
No. 3, EQTY used approximately $96,181.50 (excluding brokerage commissions) of the working capital of EQTY to purchase the shares
of Common Stock reported in this Amendment No. 3, and LCS used approximately $18,908,016.50 (excluding brokerage commissions) of
the working capital of LCS to purchase the shares of Common Stock reported in this Amendment No. 3.
Item 4. Purpose of Transaction
Item 4 of the Schedule 13D is hereby
amended by adding the following after the seventh paragraph thereof:
On March 19, 2018, Brigade delivered
another letter to the Issuer’s CEO and Board (the “March Letter”) (i) reaffirming its opposition to and intention to
vote against the Merger, (ii) detailing its disagreement with the report published by Institutional Shareholder Services (“ISS”)
on March 16, 2018 recommending a vote for the Merger (“ISS Report”) and (iii) urging the other Issuer stockholders to
vote against the Merger. In the March Letter, Brigade also urges the Board and management to conduct a self-evaluation and refresh
its ranks.
The March Letter notes that by rushing
headlong into a sale, the Board has failed to capitalize on numerous opportunities to maximize value in an improving business and
regulatory environment. The March Letter also cites the suspicious timing of the downward revisions to the Issuer’s projections
which — given senior management’s contemporaneous negotiation of future employment agreements with the Consortium — raises serious
questions about management’s motivations in forcing the Merger. While Brigade had hoped that the Issuer’s proxy materials would
answer these questions and give the critical details necessary to justify a $9.00 per share merger price, those materials fail
to provide any analysis to justify the revisions to the projections. Additionally, the March Letter notes ISS’s cited concerns
in the ISS Report regarding Issuer’s sales process and lack of a premium offered in the Merger, as well as ISS’s assessment that
“the acquirer group has the potential to earn a substantial return on its investment.” For these and the other reasons
set forth in the March Letter, Brigade advised the Issuer that it continues to believe the Merger is not in the best interests
of the Issuer’s stockholders and intends to vote against it, and Brigade urges other stockholders to do the same. Brigade also
stated in the March Letter that, should Issuer’s stockholders reject the Merger, it expects the Issuer and the Board to begin an
orderly transition to new leadership via a prompt board refresh and thorough review of the Issuer’s senior leadership and strategic
direction, aided by the numerous favorable regulatory developments highlighted in the March Letter.
The foregoing description of the March
Letter is qualified in its entirety by reference to the March Letter, a copy of which is filed herewith as Exhibit B and is incorporated
by reference herein.
Item 4 of the Schedule 13D is hereby
further amended by deleting the last paragraph of the Initial Schedule 13D and substituting the following in lieu thereof:
Brigade reserves the right to change
its intention with respect to any and all matters referred to in subparagraphs (a) – (j) of Item 4 of Schedule 13D (other
than subparagraph (d) of Item 4). Brigade may, at any time and from time to time, review or reconsider its position and/or change
its purpose and/or formulate plans or proposals with respect thereto and carry out any of the actions or transactions described
in paragraphs (a) through (j) of the instructions to Item 4 of Schedule 13D (other than subparagraph (d) of Item 4), to the extent
it deems advisable.
