Lawndale weighs in on latest offer for National Home Health in letter to board

By Lisa Kerner

Charlotte, N.C., May 16 - National Home Health Care Corp.'s third-largest shareholder, Lawndale Capital Management and its affiliates, with a 7% stake in the company, contacted the board of directors for the second time since May 9 regarding offers for National Home Health.

A letter from the investor to the board was included as part of a schedule 13D filing with the Securities and Exchange Commission.

Lawndale believes that a new offer from Premier Home Health Care Services, Inc. to acquire National Home Health for $12.75 per share in cash, plus up to $0.25 per share tied to a lower break-up fee, is superior to the $12.50 per share offer of Angelo Gordon & Co. and affiliates.

"It is time for the board to stop taking actions designed to block the full and fair auction that National Home Health Care Corp. shareholders have always deserved. We believe the board's decision to truncate the limited 'auction' between Premier Home Health Care and the Angelo Gordon/Insider group is irresponsible, self-serving and in conflict with the best interests of shareholders and once again demonstrates that a conflicted board is favoring the Fialkow family interests over those of the company's public shareholders," the investor's letter, signed by manager Andrew E. Shapiro, stated.

In its May 9 letter to the board, Lawndale said it is "time to level the playing field and maximize value for shareholders via a full and fair auction that has still not taken place."

Lawndale asked independent directors "to act in a responsible manner, and refuse to enter into any subsequent agreement with the Angelo Gordon/Insider group unless such new agreement eliminates a break-up fee and allows for a reasonable 'go-shop' period. The reality here is that this should not be the end of the auction but the beginning."

In February, Lawndale said it believed that some members of the company's board and management may have breached their fiduciary duties by not obtaining the maximum sale price for the company, citing the proxy for the sale of National Home Health Care to management, Eureka Capital Partners and Angelo, Gordon for $11.35 to $11.50 per share.

On Feb. 14, National Home Health Care received a non-binding proposal from Premier Home Health Care Services, Inc. to acquire all of the outstanding shares of the company for $12.00 per share in cash.

National Home Health is a Scarsdale, N.Y., home health care and staffing services company.

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