Community Health Systems, Inc. Adopts a Short-Term Stockholder Protection Rights Agreement
October 03 2016 - 4:25PM
Business Wire
The Board of Directors of Community Health Systems, Inc. (NYSE:
CYH) (the “Company”) today adopted a Stockholder Protection Rights
Agreement (the “Rights Agreement”) and declared a dividend of one
Right on each outstanding share of the Company’s common stock. The
record date to determine stockholders entitled to receive the
Rights is October 13, 2016. The Rights Agreement will expire on
April 1, 2017.
Wayne T. Smith, chairman and chief executive officer of the
Company, stated, “The Board is currently exploring a variety of
options with private equity sponsors, as well as other potential
alternatives that would benefit all stockholders of the Company. In
light of the recent accumulation of a significant block of the
Company’s common stock, the Board has adopted the Rights Agreement
with a six-month duration in order to prevent the accumulation of a
potentially controlling block of the Company’s common stock until
the Company’s exploration of options and alternatives has
concluded. The Rights Agreement is not intended to and will not
prevent a transaction involving the Company’s stock at a full and
fair price. The Rights Agreement does not in any way weaken the
Company’s financial strength or interfere with its business plans
or interfere with the Company’s exploration of options or
alternatives. The Rights Agreement was not adopted in response to
any specific effort to acquire the Company or influence its
management.”
The discussions are at a very preliminary stage and there is no
timeline established for this review. There can be no certainty
that the exploration will result in any kind of transaction. The
Company does not expect to make further public comment regarding
these matters while this exploration takes place.
Under the terms of the Rights Agreement, until the earlier of
(i) the Company’s announcing that a person or group has acquired
15% or more of the Company’s common stock (an “Acquiring Person”)
or the date and time on which any Acquiring Person has acquired
more than 40% of the Company’s common stock (in either case, the
“Flip-in Date”) and (ii) the tenth business day, or such later date
designated by the Board, after any person or group commences a
tender offer that will result in such person or group owning 15% or
more of the Company’s common stock, the Rights will be evidenced by
the common stock certificates, will automatically trade with the
common stock and will not be exercisable. Thereafter, separate
Rights certificates will be distributed and each Right will entitle
its holder to purchase fractions of Participating Preferred Stock
having economic and voting terms similar to those of one share of
common stock for an exercise price of $50.00.
Upon the occurrence of the Flip-in Date, each Right (other than
Rights beneficially owned by any Acquiring Person or transferees
thereof, which Rights become void) will entitle its holder to
purchase, for the exercise price, a number of shares of the
Company’s common stock having a market value of twice the exercise
price. Also, if after an Acquiring Person controls the Company’s
Board of Directors or is the owner of 50% or more of the Company’s
common stock, the Company is involved in a merger or sells more
than 50% of its assets or earning power and, in the case of a
merger, the Acquiring Person will receive different treatment than
all other stockholders or the transaction is with the Acquiring
Person, each Right will entitle its holder to purchase, for the
exercise price, a number of shares of common stock of the Acquiring
Person having a market value of twice the exercise price. If any
person or group acquires between 15% and 50% of the Company’s
common stock, the Board of Directors may, at its option, exchange
one share of the Company’s common stock for each Right.
The Rights may generally be redeemed by the Board of Directors
for $0.001 per Right prior to the Flip-in Date.
Smith stated, “The issuance of the Rights has no dilutive
effect, will not affect reported earnings per share, is not taxable
to the Company or its stockholders, does not affect our debt
instruments, and will not change the way in which our shares are
traded.”
A letter regarding the Rights Agreement and a Summary of certain
terms of the Rights Agreement will be mailed to the stockholders of
the Company.
About Community Health Systems, Inc.
Community Health Systems, Inc. is one of the largest publicly
traded hospital companies in the United States and a leading
operator of general acute care hospitals in communities across the
country. The Company, through its subsidiaries, owns, leases or
operates 158 affiliated hospitals in 22 states with an aggregate of
nearly 27,000 licensed beds. The Company’s headquarters are located
in Franklin, Tennessee, a suburb south of Nashville. Shares in
Community Health Systems, Inc. are traded on the New York Stock
Exchange under the symbol “CYH.” More information about the Company
can be found on its website at www.chs.net.
Forward-Looking Statements
Statements contained in this news release regarding potential
transactions, operating results, and other events are
forward-looking statements that involve risk and uncertainties.
Actual future events or results may differ materially from these
statements. Readers are referred to the documents filed by
Community Health Systems, Inc. with the Securities and Exchange
Commission, including the Company’s annual report on Form 10-K,
current reports on Form 8-K and quarterly reports on Form 10-Q.
These filings identify important risk factors and other
uncertainties that could cause actual results to differ from those
contained in the forward-looking statements. The Company undertakes
no obligation to revise or update any forward-looking statements,
or to make any other forward-looking statements, whether as a
result of new information, future events or otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20161003006448/en/
Community Health Systems, Inc.Investor Contact:W. Larry
Cash, 615-465-7000President of Financial Services and Chief
Financial OfficerorMedia Contact:Tomi Galin,
615-628-6607Senior Vice President, Corporate Communications,
Marketing and Public Affairs
Community Health Systems (NYSE:CYH)
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