Enhance Stock Price, AMI Investors Demand
An investor group including some of the billionaire Bass brothers of Texas warned American Medical International that the group may sue or attempt to take over the company if management fails to take quick action to boost the value of AMI stock.
RTF Partners, which holds an 11.6% stake in the Beverly Hills-based hospital management firm, issued the warning in a document filed Friday with the Securities and Exchange Commission. The possible suit would involve AMI management’s legal obligation to act in the best interest of shareholders.
AMI would not comment on the filing, but several industry analysts said it was designed to prompt AMI to negotiate with a group led by Dr. M. Lee Pearce, who has made a $24-a-share offer to buy the company, or to solicit other buyout proposals.
“I think they plan to force the company to get a higher price from Pearce,” said Rae Alperstein, an analyst at Bateman Eichler, Hill Richards in Los Angeles. “The Pearce offer is a little low, and they (RTF) are trying to force the company’s hand. . . . They (RTF) might want to sell their shares for $26 to $29 a share.”
Seth Shaw, an analyst at Prudential Bache, said RTF had been patient until this week.
“Now they’ve taken the gloves off,” he said. “They want some action.”
The latest filing comes two days after RTF, led by Sid Bass of Ft. Worth, filed an SEC document indicating that it has asked AMI management to consider all buyout offers and other proposals to increase share value. The request was RTF’s response to the Pearce group’s buyout bid made March 23. Pearce is a member of AMI’s board and owns about 10% of the company’s stock.
Pearce and his two partners in Shamrock Investments Acquisition Corp.--a Los Angeles-based investment firm that is unrelated to Roy O. Disney’s Shamrock Holdings--joined forces and offered to buy AMI for $1.7 billion, nearly all in cash. Another investment banking firm on the same date submitted a competing proposal--a restructuring plan to increase share prices to $25 to $29 per share, including a special cash dividend. The trading range for AMI stock during the past year had been $14 to $18 per share.
AMI took no position on the proposals. Instead, the company immediately established a special committee to evaluate the two offers. The committee, composed of seven of AMI’s 14 board members, has not yet reported its findings.
The committee has had enough time to make some decisions, RTF’s latest SEC filing charged. The document said RTF is “disappointed that after three weeks of consideration . . . the committee . . . has failed to take any action . . . respecting the various pending proposals.” The committee has also failed to report on the prospects of soliciting competing buyout offers and other possible options, the document said.
RTF said it was considering a number of actions to prompt the committee and the company to act. The options include litigation, a bid for controlling interest and an effort to solicit shareholder proxies to vote for action, the document said. RTF also might ask an investment banker to explore ways to enhance the value of AMI shares, the statement said.
