SunLink Health Systems, Atlanta, announced that the company has signed a letter of intent to merge with certain affiliates of Foundation HealthCare Affiliates that own a majority stake in one hospital and manage another hospital, according to a SunLink news release.
SunLink, Foundation HealthCare explore deal
The deal is subject to negotiation of a definitive agreement and the consent of lenders, according to the release. If the deal is completed, the newly combined company is expected to be named Foundation SunLink Healthcare Affiliates and two directors named by Foundation will join the board.
The two hospitals are both in Texas but were not named. The Foundation affiliates that are part of the deal also own minority stakes in 14 ambulatory surgery centers in seven states and manage those centers.
In consideration for the merger, SunLink will issue various securities to the Foundation affiliates. These include nearly 1.6 million SunLink common shares, 400,000 shares in two classes of preferred stock and 3 million, three-year warrants entitling the holders to purchase common shares of SunLink at $6 per share. SunLink's common shares were priced at $1.82 in mid-morning trading on the American Stock Exchange, making the common shares in the deal worth about $2.9 million. The preferred shares have a liquidation value of $100 each, or a total of $40 million.
SunLink also will issue some preferred stock and warrants to its existing shareholders.
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