National Home Health Care shareholder blasts board for take-under agreement

By Lisa Kerner

Charlotte, N.C., Feb. 15 - National Home Health Care Corp. shareholder Lawndale Capital Management, LLC said it believes that members of the company's board and management may have breached their fiduciary duties by not obtaining the maximum sale price for the company.

Lawndale, which owns 394,348 shares, or 7%, of National Home Health Care common stock, made its claims in a letter to the board included as part of a schedule 13D filing with the Securities and Exchange Commission.

In its letter, Lawndale says the proxy for the sale of the company to management, Eureka Capital Partners and Angelo, Gordon & Co. for $11.35 to $11.50 per share "reinforces what we have suspected all along - that the 'process' was and continues to be perverted by self-interested management and select insiders and rubber stamped by a board that we must reluctantly conclude has abandoned its duties to independent shareholders."

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.

Lawndale believes this offer could result in a superior proposal, but noted that the management deal, or take-under agreement, includes an "unnecessary and improper" breakup fee.

The shareholders are asking the National Home Health Care board to "undo" the take-under agreement and, when confronted with a second chance to run a fair process, have a "better understanding of the appropriate steps necessary to maximize shareholder value."

The Scarsdale, N.Y., home health care and staffing services company's stock (Nasdaq: NHHC) closed at $11.65 on Feb 14.

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