Resurgence vs. SunLink

Message from health care company Resurgence Health Group LLC to SunLink Helath Systems Inc.: the diagnosis is not good and its time to sell.

SunLink Health Systems, the Atlanta-based operator of seven community hospitals in Alabama, Georgia and Mississippi, is being pressured by shareholders that includes Resurgence Health Group to respond to a takeover offer the group had made in November.

According to a Securities and Exchange Commission filing on Monday, a shareholder group including activist investor, Berggruen Holdings North America and Resurgence Health Group, want SunLink to respond to its $7.50 a share bid to take over the company. Resurgence and its group of investors, which own 9.4% of the hospital operator, had originally made the offer to buy SunLink in November.

The group on Jan. 11 sent a letter to Howard Turner, special counsel to the special committee of SunLink’s board, seeking a response. The group said it was disappointed that SunLink did not respond to their offer by Dec. 7. Subsequently they sent another letter, according to the filing. “Our client is frustrated with the Board’s inaction with respect to the Offer and believes that such inaction evidences management’s desire to remain entrenched at the expense of SunLink’s shareholders,” Resurgence Health wrote in the letter.

Last year, according to the filing, Berggruen Holding teamed up with Resurgence and agreed to provide the financing to enable Resurgence to make the bid. The bidders also complained about SunLink’s board, noting “close personal relationships” between management and certain directors and questioning whether they are looking out for shareholder interests.

“We urge you to act not in your own self-interests or in a manner beholden to management, but instead, in the best interests of all of your shareholders by contacting us promptly and meeting with us as soon as possible,” the letter said. SunLink has a $46 million stock market capitalization. - Ron Orol