The former chairman and majority owner of Summit Health is selling his $55 million worth of stock in OrNda HealthCorp.
Donald Freeberg acquired his OrNda stock in April when Summit was acquired by OrNda in a three-way merger that also included American Healthcare Management. The deal made Nashville, Tenn.-based OrNda the fifth-largest investor-owned hospital chain, with 48 hospitals in 17 states (April 25, p. 4).
This month, OrNda said it would make a public offering of 3.6 million shares held by one stockholder during the fourth quarter, which ends Aug. 31. Although the company declined to provide the stockholder's identity, Mr. Freeberg, 69, reported his intent to sell his shares in a filing with the Securities and Exchange Commission earlier this year.
In that filing, Mr. Freeberg also said that as a condition of the merger with OrNda he had the right to appoint a director to OrNda. However, he waived that right, the filing said.
OrNda stock now is selling for about $15 a share in over-the-counter trading.
Mr. Freeberg formerly owned 54.7% of Summit's stock. He now controls more than 3.6 million shares, or 10%, of OrNda's stock, according to the filing.
OrNda is expected to file a registration statement within the next two to three weeks for the offering.
OrNda executives declined to speculate on why Mr. Freeberg wants to sell the company's stock. His SEC filing did not disclose the reason, and he couldn't be reached for comment.
In addition, some other shareholders may be able to sell their shares as part of the offering under certain "piggyback" rights, OrNda executives said.
Although they declined to provide the names of those shareholders, they apparently include Gary Winnick, a Beverly Hills, Calif., investor who helped finance the Republic Health Corp. leveraged buyout in 1986. Republic was the predecessor company name for OrNda. Mr. Winnick owns 2.8 million shares of OrNda, according to the company's prospectus.