Page 9 of 15 – SEC Filing
Representatives of Brigade intend to engage
in discussions with the Issuer’s management and members of the Issuer’s board of directors (the “Board”)
and other interested persons regarding, among other things, the Issuer’s business, management, capital structure and allocation,
corporate governance, Board composition, strategic alternatives and direction, and strategies to enhance shareholder value, including
regarding the recently announced proposed acquisition of the Issuer by affiliates of TPG
Capital (“TPG”), Welsh, Carson, Anderson & Stowe (“WCAS”) and Humana Inc. (“Humana”)
(TPG, WCAS and Humana collectively, the “Consortium”), pursuant to the Agreement
and Plan of Merger (the “Merger Agreement”) with Kentucky Hospital Holdings, LLC, a Delaware limited liability company
(“HospitalCo Parent”), Kentucky Homecare Holdings, Inc., a Delaware corporation (“Parent”), and Kentucky
Homecare Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and other potential
strategic alternatives to the merger contemplated by the Merger Agreement (the “Merger”). Concurrently with the execution
of the Merger Agreement, the Issuer also entered into a Separation Agreement (the “Separation Agreement”) with Parent,
HospitalCo Parent and Kentucky Hospital Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of HospitalCo Parent.
Any such actions or transactions that may be taken, advocated by, or involve Brigade alone or in conjunction with other shareholders,
financing sources and/or other third parties, could include proposing or considering one or more of the actions described in subsections
(a) through (j) of Item 4 of Schedule 13D.
On December 27, 2017, Brigade delivered a letter
to the Board (the “Letter”) stating its opposition to the Merger and noting the material inadequacy of the terms of
the proposed transaction. Brigade’s belief is that the $9.00 per share cash merger price significantly undervalues the Issuer’s
Common Stock.
The Letter notes that from the perspective
of maximizing shareholder value, Brigade believes it is premature for the Issuer to engage in a sale transaction. Over the past
year, Brigade noted that the Issuer has overcome numerous challenges and calmed most of the headwinds against its business, positioning
it for substantial stock price appreciation in 2018 and beyond. Brigade expected management to continue operating the business
to enable the shareholders who have patiently supported the Issuer throughout its challenges to realize the benefits of the business
improvements through their continued ownership in the going concern. Instead, Brigade stated in the Letter, that it believes management
has chosen to pursue a transaction with the Consortium that severely undervalues the Issuer and ensures that the Consortium –
rather than existing shareholders – will reap the benefits of the value enhancement the improved business is expected to
generate. For these and the reasons stated in the Letter, Brigade advised the Issuer that it does not believe the proposed transaction
is in the best interests of the Issuer’s shareholders and intends to actively oppose it.
The foregoing description of the Letter is
qualified in its entirety by reference to the Letter, a copy of which is filed herewith as Exhibit 1 and is incorporated by reference
herein.
Brigade intends to review its investment in
the Issuer on a continuing basis. Depending on various factors, including, without limitation, the outcome of any discussions referenced
above, Brigade’s financial position and strategic direction, actions taken by the Board, price levels of the Common Stock,
other investment opportunities available to Brigade, conditions in the securities market and general economic and industry conditions,
Brigade may in the future take such actions with respect to its investment in the Issuer as it deems appropriate, including, without
limitation, purchasing additional shares of Common Stock and/or other equity, debt, notes, instruments or other securities of the
Issuer (collectively, “Securities”), disposing of any or all of its Securities, in the open market or otherwise, at
any time and from time to time, and engaging in any hedging or similar transactions with respect to the Securities. Brigade may
participate in and influence the affairs of the Issuer through the exercise of its voting rights with respect to the shares of
Common Stock owned by the Reporting Persons.
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. 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, to the extent it deems advisable.
