American Homepatient investor says concerns relate to liquidity, debt reduction

By Jennifer Lanning Drey

Portland, Ore., June 11 - American Homepatient Inc. investor Highland Capital Management LP and its affiliates are concerned with the company's "over-leveraged balance sheet," possible impediments to successfully navigating the challenging Medicare reimbursement environment and the near-term maturity of secured debt, Highland Capital said in a recent schedule 13D filing made with the Securities and Exchange Commission.

The conditions are likely to make it difficult for American Homepatient to increase its liquidity or reduce debt, the investor group said in the filing.

Representatives from American Homepatient were not available for comment Monday, but the company said its "management attempts to monitor and improve cash flow in a number of ways, including inventory utilization analysis, cash flow forecasting and accounts receivable," in its most recent 10Q filing with the SEC.

As previously reported, Highland Capital and the reporting persons beneficially own 8,437,164 shares, or 48%, of the Brentwood, Tenn., home health care provider's common stock.

American Homepatient's other major shareholders include Fidelity Management and Research Co., which owns 1,735,000 shares, or a 9.9% stake, and Mellon Financial Corp., which owns 1,225,583 shares, or a 7.0% stake, according to a form DEF 14A filed in May 2006 with the Securities and Exchange Commission.

Previous major shareholders Loeb Partners Corp., JDG Management Corp., Lampe, Conway & Co., LLC and Accipiter Life Sciences each separately reported having sold all of their shares in American Homepatient since the company's last annual shareholder meeting, held in June 2006.

Loeb held 1,602,711 shares, or a 9.12% stake, at Sept. 26, 2006; JDG reported owning 1,540,965 shares, or an 8.8% stake, at the company's June 2006 annual shareholders meeting; Lampe Conway held 1,295,775 shares, or a 7.4% stake, at the time of the June meeting; and Accipiter held 1,067,813 shares, or a 5.1% stake, in June 2006.

Highland Capital held just 1,719,994 shares, or a 9.8% stake, in American Homepatient at the June 2006 shareholders meeting, but the investor group has gradually increased its number of shares held since then. On Dec. 11, Highland Capital reported owning 1,988,094 shares, or an 11.3% stake, in the company.

The investor group then reported increasing its stake in the company again on March 27 when it held 3,068,182 shares, or 17.5%.

By April 9, Highland Capital reported owning the 8,437,164 shares, or the 48% stake, in American Homepatient that it currently holds.

As previously reported, Highland Capital said it initially acquired stock in the company as an investment but recently had conversations with the company's chief executive officer regarding financing alternatives and other matters related to the company's capital structure and business operations.

Highland Capital has expressed interest in having the company's board of directors expanded by two directors, with Highland Capital representatives being elected to fill the vacancies.

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