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SunLink and HealthMont merge. (Market Watch).

In a deal valued at about $15.3 million, Atlanta-based SunLink Health Systems Inc. reports that it has signed a definitive agreement to acquire HealthMont Inc.

SunLink owns and operates community hospitals in four states, including nursing homes, within the areas served by its acute-care facilities and home health agencies, HealthMont is a Franklin, Tenn.-based privately held operator of community hospitals.

The merger will add two community hospitals to SunLink's holdings: a 60-bed acute-care facility in Adel, Ga., including a 95-bed nursing home; and a 49-bed acute-care hospital in Fulton, Mo. A community hospital in San Benito, Texas, currently operated by HealthMont, will be sold before the merger.

SunLink reports that it will issue up to 1.15 million of its shares for all the issued and outstanding capital stock of HealthMont, based on SunLink's share price of $2.37 as of market close on Oct. 14, 2002, plus the senior debt and capital lease obligations to be assumed, and including estimated transaction costs.

SunLink posted revenue of $87.5 million for the fiscal year ended June 30. The two community hospitals report revenue of about $28.5 million and earnings before interest, taxes, depreciation and amortization of about $3 million for the same 12 months. The company expects full-year revenue to rise about 30 percent to $1 16 million.

The merger agreement, which should close in late 2002 or early 2003, must still meet regulatory approvals, SunLink and HealthMont shareholder approvals, and a modification to the terms of HealthMont's existing senior debt. HealthMont's corporate facilities and staff are not included in the deal. SunLink will issue 95,000 shares to settle certain obligations to HealthMont officers and directors. It will also cover certain outstanding HealthMont options and warrants, and will issue its own warrants as part of the transaction financing. SunLink will assume up to a total of $9.8 million in HealthMont senior debt and capital lease obligations, and will take out a $3 million, three-year, term loan for additional working capital.

Ronald J. Vannuki will step down from SunLink's board after the merger. SunLink plans to elect Gene Burleson, a HealthMont director, to replace him.
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Author:Pagan, Joyce
Publication:Contemporary Long Term Care
Geographic Code:1USA
Date:Dec 1, 2002
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