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SunLink Health Systems Inc. Message Board

  • buyacramer buyacramer Mar 9, 2013 2:27 PM Flag

    Worthwhile to be a shareholder?

    Appears to me there is no benefit to owning the shares for any near term price appreciation. The only reason to own SSY is if you believe that their business model will generate siginificant shareholder returns over what could be a long drawn out multi-year period. Further, you will have to be a private shareholder and loose transparency into the company and not have a readily available market to sell your shares if you wanted out. Would appreciate other thoughts on why it makes sense to own here.
    Key Points:
    - Odd lot purchase of shares from holder of less than 99 shares with the goal of going private. Without an outright buyout, SEC will not allow them to avoid SEC filings and be a private co. with over 300 shareholders.
    - If successful in reducing # of shareholders, existing shareholders will own shares in a private company (not publicly traded).
    - Being private will make it difficult for shareholders (other than inside mgmt) to have a clear picture of what is going on.
    - No public market for shares. No sense of what shares are worth.
    - Mgmt owns the majority of the shares so non-mgmt shareholders really don't have any say in the business.
    - Company owns poor undesirable assets (4 small hospitals and an empty building in Alabama that is worth at most $1.5M if they can find a buyer).

    My opinion is that if they reduce the # of shareholders to required levels, they will delist. This will make mgmt's work a lot easier as they no longer have to maintain regular filings with the SEC, which can be time consuming and costly. Mgmt will continue to run the business as is, but I dont see much potential value creation as there really isn't a whole lot of improvements that can be done (small hospitals in rural unpopulated areas). The only benefit is mgmt, which will continue getting a nice salary but have less accountability and transparency. Why would anybody want money tied up in shares that have no market and no transparency into what is going on at company?

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    • Maybe I'm way wrong but this is why I bought some....

      Management clearly stated they want to take the company private. Only way to do that is to buy my shares. Only way to do that without getting tied up in court is to pay me book value.

      Now I'm not totally stupid, I realize they can play some games and manipulate some numbers and strong arm a few of us into a #$%$ deal....but their book value looks reasonable and is in the public domain and they have demonstrated that they are willing to pay north of $1.50 per time will tell.

      • 1 Reply to uptabdowntab
      • If you read their latest 10Q SEC filing, in the section on the odd lot towards the end, they state that odd lot shareholders represent about 1% of the company shares. They currently have over 500 shareholders and the way to not be subject to SEC filings, public audits, and reporting is to reduce the shareholder base under 300. The cost they estimate of buying out these small shareholders is about $200,000. They do intend to be a private company, but not by an outright buyout. If they succeed in reducing shareholder base, existing shareholders will own a private company is my conclusion when reading the 10Q. I only researched this because I was thinking about buying to capitalize on a potential buyout, but appears to me, they simply want to be a private company with many shareholders. I wouldn't want to be a shareholder in a private company like this because it has very little upside potential and the most likely scenario is mgmt continuing down the path they are on for the foreseeable future (they still get a nice salary and will ride it into retirement). If I want to sell my shares, I'd have to convince some private buyer to buy it from me like being a partner in a private restaurant biz. imagine the headache of negotiating a price (no market) and finding a buyer. Other thoughts appreciated.

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