13D Filing: Glenview Capital and Tenet Healthcare Corp (THC)

SCHEDULE 13D

Item 3.

Source and Amount of Funds or Other Consideration

The funds used for the purchase of the Shares reported herein by the Reporting Persons were derived from general working capital of the Glenview Funds, which may have included margin account borrowings made in the ordinary course of business.  In such instances, the positions held in the margin accounts are pledged as collateral security for the repayment of debit balances in the account, which may exist from time to time.  Because other securities are held in the margin accounts, it is not possible to determine the amounts, if any, of margin used to purchase the Shares reported herein.  The Reporting Persons have not made any purchases of Shares since the filing of their most recent Statement on Schedule 13G, filed with the SEC on November 13, 2015.

Item 4.

Purpose of Transaction

The Reporting Persons acquired the Shares for investment purposes, and such purchases have been made in the Reporting Persons’ ordinary course of business.  The Reporting Persons engaged in conversations with the Company’s CEO regarding, among other things, representation on the Company’s Board of Directors (the “Board”).  Towards that end, on January 18, 2016, Glenview Capital Management and the Glenview Funds (collectively, the “Glenview Parties”) entered into a Support Agreement with the Company, pursuant to which the Company agreed to increase the size of its Board by two directors and appoint two senior employees of Glenview Capital Management, Matthew Ripperger (“Mr. Ripperger”) and Randy Simpson (“Mr. Simpson” and, together with Mr. Ripperger, the “Glenview Designees”), to fill the newly-created vacancies, effective immediately.  In addition, under the Support Agreement, between December 15, 2016, and January 31, 2017, the Glenview Parties may propose two individuals for nomination to the Board who are independent of both the Company and the Glenview Parties (the “Independent Nominees”).

Support Agreement

The Company further agreed to include Mr. Ripperger and Mr. Simpson in its slate of nominees for election as directors of the Company, and to use reasonable best efforts to cause the election of the Glenview Designees (including recommending that the Company’s shareholders vote in favor of the election of the Glenview Designees (along with all of the Company’s nominees) and otherwise supporting the Glenview Designees for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees in the aggregate), at the Company’s (i) 2016 annual meeting of shareholders (the “2016 Annual Meeting”) and, (ii)  if the Glenview Designees agree to serve, at the Company’s 2017 annual meeting of shareholders (the “2017 Annual Meeting”).  For as long as the Glenview Designees serve on the Board, but subject to the applicable exchange director independence requirements, Mr. Ripperger shall be appointed to the Human Resources (Compensation) Committee of the Board and the Health IT Committee of the Board and Mr. Simpson shall be appointed to the Nominating and Corporate Governance Committee of the Board and the Quality, Compliance & Ethics Committee of the Board.  Under the terms of the Support Agreement, if at any time the Glenview Parties, together with all controlled Affiliates (as defined in the Support Agreement) of the members of the Glenview Parties (such controlled Affiliates, collectively and individually, the “Glenview Affiliates”), cease to collectively Beneficially Own (as defined in the Support Agreement), an aggregate Net Long Position (as defined in the Support Agreement) of at least (x) 10% of the Shares outstanding, the executed irrevocable resignation letter previously provided by Mr. Ripperger, in the form attached as Exhibit B-1 to the Support Agreement, shall become effective, and/or (y) 5% of the Shares outstanding, the executed irrevocable resignation letters previously provided by both Mr. Ripperger, in the form attached as Exhibit B-1 to the Support Agreement, and Mr. Simpson, in the form attached as Exhibit B-2 to the Support Agreement, shall become effective.