0001169232-08-001235.txt : 20080305
<SEC-HEADER>0001169232-08-001235.hdr.sgml : 20080305
<ACCEPTANCE-DATETIME>20080305140651
ACCESSION NUMBER: 0001169232-08-001235
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 3
FILED AS OF DATE: 20080305
DATE AS OF CHANGE: 20080305
GROUP MEMBERS: DAVID NIERENBERG
GROUP MEMBERS: NIERENBERG INVESTMENT MANAGEMENT OFFSHORE, INC.
GROUP MEMBERS: THE D3 FAMILY BULLDOG FUND, L.P.
GROUP MEMBERS: THE D3 FAMILY CANADIAN FUND, L.P.
GROUP MEMBERS: THE D3 FAMILY FUND, L.P.
GROUP MEMBERS: THE DIII OFFSHORE FUND, L.P.
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: NIERENBERG INVESTMENT MANAGEMENT CO
CENTRAL INDEX KEY: 0001282683
IRS NUMBER: 911677205
FILING VALUES:
FORM TYPE: SC 13D/A
MAIL ADDRESS:
STREET 1: 19605 NE 8TH ST
CITY: CAMAS
STATE: WA
ZIP: 98607
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: MEDCATH CORP
CENTRAL INDEX KEY: 0001139463
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062]
IRS NUMBER: 562248952
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0930
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-62451
FILM NUMBER: 08667254
BUSINESS ADDRESS:
STREET 1: 10720 SIKES PLACE SUITE 300
CITY: CHARLOTTE
STATE: NC
ZIP: 28277
BUSINESS PHONE: 7047086600
MAIL ADDRESS:
STREET 1: 10720 SIKES PLACE SUITE 300
CITY: CHARLOTTE
STATE: NC
ZIP: 28277
</SEC-HEADER>
<DOCUMENT>
<TYPE>SC 13D/A
<SEQUENCE>1
<FILENAME>d73827_sc13d-a.txt
<DESCRIPTION>AMENDMENT NO. 10 TO SCHEDULE 13D
<TEXT>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 10)
MEDCATH CORPORATION (MDTH)
(Name of Issuer)
Common Stock
(Title of Class of Securities)
58404W109
(CUSIP Number)
David Nierenberg
The D3 Family Funds
19605 NE 8th Street
Camas, WA 98607
(360) 604-8600
With a copy to:
Henry Lesser, Esq.
DLA Piper US LLP
2000 University Avenue
East Palo Alto, CA 94303
(650) 833-2000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 3, 2008
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
The D3 Family Fund, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
483,096 common shares (2.3%)
---------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 483,096
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 483,096; for all reporting
persons as a group, 2,934,511 shares (13.8%)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
The DIII Offshore Fund, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bahamas
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
558,166 common shares (2.6%)
---------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 558,166
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 558,166; for all reporting
persons as a group, 2,934,511 shares (13.8%)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
The D3 Family Bulldog Fund, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,798,863 common shares (8.5%)
---------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 1,798,863
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 1,798,863; for all reporting
persons as a group, 2,934,511 shares (13.8%)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
The D3 Family Canadian Fund, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
94,386 common shares (0.4%)
---------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 94,386
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 94,386 shares; for all
reporting persons as a group, 2,934,511 shares (13.8%)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
Nierenberg Investment Management Company, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
---------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 2,934,511 common shares (13.8%)
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,934,511
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 2,934,511; for all reporting
persons as a group, 2,934,511 shares (13.8%)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
CO
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
Nierenberg Investment Management Offshore, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bahamas
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
---------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 558,166 common shares (2.6%)
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
558,166
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 558,166; for all reporting
persons as a group, 2,934,511 shares (13.8%)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
CO
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
David Nierenberg
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
---------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 2,934,511 common shares (13.8%)
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,934,511
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 2,934,511; for all reporting
persons as a group, 2,934,511 shares (13.8%)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IN
- --------------------------------------------------------------------------------
8
<PAGE>
This Amendment No.10 to Schedule 13D (this "Amendment") amends the
below-indicated items from the Schedule 13D previously filed by or on behalf of
the undersigned parties (the "Reporting Persons"), as previously amended (the
"Schedule 13D"), by supplementing such Items with the information below:
Item 2. Identity and Background.
David Nierenberg is hereby added as a Reporting Person; his business
address is 19605 NE 8th Street, Camas WA 98607; his principal occupation is
President of Nierenberg Investment Management Company, Inc. and Nierenberg
Investment Management Offshore, Inc, two of the other Reporting Persons; during
the past five years he has not been convicted in a criminal proceeding required
to be reported in response to Item 2(d), or a party to a civil proceeding
required to be reported in response to Item 2(e), of Schedule 13D ; and he is a
citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
The total amount of funds used by the Reporting Persons to pay for the
purchases of Shares reported in Item 5(c) was $3,196,747. The source of funds
for purchases of Shares by each of the Reporting Persons is the working capital
of the applicable Fund.
Item 4. Purpose of Transaction.
We have continued buying MedCath shares for investment because we believe
that the shares are extremely undervalued. As set forth in our attached letter,
we urge the Company's board to increase the current $59M repurchase program by
an additional $100M and offer suggestions about how and why to do this.
The previous statements by the Reporting Persons regarding their investment in
MDTH (including those contained in the attached letter) represent solely their
own analyses and judgments, based on publicly-available information and their
own internal evaluation thereof. Those statements are not intended, and should
not be relied on, as investment advice to any other investor or prospective
investor. To the extent those statements reflect assessments of possible future
developments, those assessments are inherently subject to the uncertainties
associated with all assessments of future events; actual developments may
materially differ as a result of circumstances affecting MDTH and/or extrinsic
factors such as developments in the company's industry and the economic
environment. The Reporting Persons reserve the right to change their internal
evaluation of this investment in the future, as well as to increase or decrease
their investment depending on their evaluation, and to discuss the company and
their investment in it with the directors and executive officers of the company
and third parties, without further amending the Schedule 13D except as required
by applicable rules.
9
<PAGE>
Item 5. Interest in Securities of the Issuer.
(a, b) The Reporting Persons, in the aggregate, beneficially own 2,934,511
common shares, constituting approximately 13.8% of the outstanding Shares. This
percentage is based on number of Shares reported as outstanding as of January
31, 2008 in the Company's Form 10-Q dated February 11, 2008.
(c) During the past sixty (60) days the following purchases of Shares were
made by the Reporting Persons in open market transactions:
<TABLE>
<CAPTION>
Fund Transaction Date Shares Bought Price
---- ---------------- ------------- -----
<S> <C> <C> <C>
D3 Family Fund, LP 01/03/2008 5,200 23.96
D3 Family Bulldog Fund, LP 01/03/2008 18,000 23.96
D3 Family Canadian Fund, LP 01/03/2008 1,035 23.96
D3 Family Bulldog Fund, LP 01/04/2008 25,100 23.64
D3 Family Canadian Fund, LP 01/04/2008 1,287 23.64
DIII Offshore Fund, LP 02/29/2008 7,900 20.77
D3 Family Fund, LP 03/03/2008 900 19.83
DIII Offshore Fund, LP 03/03/2008 91,200 19.83
</TABLE>
Item 7. Material to be filed as Exhibits
Exhibit 1 to this Schedule 13D is a letter to the Chairman of the Board,
President and Chief Executive Officer, and Members of the Board of MedCath Corp.
dated March 5, 2008.
Exhibit 2 to this Schedule 13D is the Joint Filing Agreement among the
Reporting Persons dated March 5, 2008 pursuant to which all of the Reporting
Persons have authorized the filing of Schedule 13D's and amendments thereto as a
group.
10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, each of the
undersigned certifies that the information set forth in the Statement is true,
complete and correct.
D3 Family Fund, L.P., D3 Family Bulldog Fund,
and D3 Family Canadian Fund, L.P.
By: Nierenberg Investment Management
Company, Inc.
Its: General Partner
March 05, 2008 By: /s/ David Nierenberg
- -------------------- -------------------------------------------
David Nierenberg, President
DIII Offshore Fund, L.P.
By: Nierenberg Investment Management
Offshore, Inc.
Its: General Partner
March 05, 2008 By: /s/ David Nierenberg
- -------------------- ------------------------------------------
David Nierenberg, President
Nierenberg Investment Management
Company, Inc.
March 05, 2008 By: /s/ David Nierenberg
- -------------------- -------------------------------------------
David Nierenberg, President
Nierenberg Investment Management
Offshore, Inc.
March 05, 2008 By: /s/ David Nierenberg
- -------------------- -------------------------------------------
David Nierenberg, President
March 05, 2008 /s/ David Nierenberg
- -------------------- ----------------------------------------------
David Nierenberg
11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>2
<FILENAME>d73827_ex-1.txt
<DESCRIPTION>LETTER TO THE CHAIRMAN OF THE BOARD
<TEXT>
EXHIBIT 1:
THE D3 FAMILY FUNDS
March 5, 2008
John T. Casey, Chairman of the Board
O. Edwin French, President and Chief Executive Officer
Members of the Board
MedCath Corp.
10720 Sikes Place
Charlotte, NC 28277
Dear John, Ed, and members of the Board:
As your largest shareholders, which have been invested in MedCath for five
years, we enthusiastically support your recent decision to invest up to $59M to
repurchase the Company's shares. At the prices which you are paying to
repurchase the shares, we believe that it is an excellent investment. Although
MedCath has the strongest balance sheet and the best revenue and profit growth
prospects of any American hospital company, the Company's enterprise value
(equity market capitalization plus debt minus cash) relative to its EBITDA was
only half that of its peer group on March 3. We suspect that the principal cause
for this extreme valuation anomaly is recurring market paranoia about a possible
legislative ban on physician referrals to hospitals in which they are investors.
Since this paranoia seems to be distorting the market's judgment, we are writing
you to make several suggestions about how MedCath might exploit the resulting
under-valuation for the benefit of those of us who want to remain long term
shareholders of the Company.
We do not believe that the size of your repurchase program should be limited to
only $59M. We do recognize that the $59M limit comes from the covenants of
MedCath's existing debt. But it is our judgment that the Company can pay off
that debt later this year, thereby removing the $59M cap on the size of your
repurchase program. Once you do that, we would urge you to authorize the Company
to repurchase another $100M of MedCath shares, provided this can be done at
bargain prices.
We also would like to suggest a way to fund the debt pay-off and the $100M
follow-on share repurchase which we believe would not impair MedCath's ability
to outgrow its rivals organically or via acquisition(s) of hospitals. We suggest
that MedCath do a master sale - leaseback of virtually all of its hospital land
and buildings, taking full advantage of the following circumstances which we do
not believe are reflected in MedCath's current book value for these assets: cap
rates today are still relatively attractive; MedCath's hospitals rank first or
second in cardiac market share in all of its markets; we believe that all of
your hospitals are profitable; most of your hospitals are located in Sun Belt or
Western markets which have attractive demographic growth; your buildings are
relatively new; and we believe that your land-holdings have appreciated
significantly in value. We therefore believe that the proceeds from such a sale
- - leaseback, combined with MedCath's existing cash, could pay off the debt whose
covenants limit
12
<PAGE>
the Company's repurchase program, and fund the repurchase of an additional $100M
of shares, while leaving the corporate balance sheet sufficiently liquid and
unencumbered to pursue any reasonable growth opportunities.
We would like to conclude with an observation about the market paranoia
referenced earlier. After five years of being loyal, supportive MedCath
stockholders, we must admit that we have become tired of this recurring
political bogeyman about banning physician ownership. It doesn't seem to matter
which party controls the Congress or who chairs the relevant committees - the
American Hospital Association and its friends on Capitol Hill do not let go of
their crusade. Worries about this issue periodically crush MedCath's share
price, artificially exacerbating its volatility, and raising MedCath's cost of
capital.
You know and we know that there are elements of unreal political theatre about
this; the claims made by AHA and its allies do not comport with economic
reality. Perhaps this should not surprise, for as former Senator Alan Simpson
said, "Those who travel the high road in Washington need not fear heavy
traffic." We all know that many AHA hospitals partner with their physicians
whenever they believe it is advantageous to do so. Certainly the not-for-profit
hospital of which I am Vice Chair does so. Why is it acceptable for a
not-for-profit to do this but objectionable when a for-profit does? Because the
for-profits are better competitors. We know that the principal reason physicians
refer cases to, and practice in, MedCath hospitals is not because they are
investors in the hospitals. Rather, it is because, unlike most community
hospitals, MedCath's hospitals are designed, operated, and governed to maximize
physician productivity. Productive time is the only asset doctors can sell. We
therefore do not doubt that, even if Congress were to ban physician investment,
doctors would still prefer practicing in MedCath's hospitals.
MedCath may have been too oppositional to Congressional efforts to change the
rules of the game. Maybe this year, instead, you should find the best way to
resolve your differences, to finally put this largely shadow-boxing issue behind
you, once and for all. Wouldn't it be better if all MedCath management's time,
and all the Company's money, were focused, not on constant lobbying, but on
building the intrinsic value of MedCath's business? Wouldn't it be terrific if
you could put an end to this recurring political paranoia and bear raids on the
stock? If you finally could reach closure on this issue, we believe MedCath's
valuation could double to eight times cash flow instead of four. (And with your
excellent growth opportunities, the share price could climb much further.) But,
until then, we urge you to repurchase as many shares as you prudently can! Carpe
diem.
Thanks for considering our views,
Sincerely yours,
David Nierenberg
Nierenberg Investment Management Company, Inc. 19605 NE 8th Street,
Camas, Washington 98607 (360) 604-8600
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>3
<FILENAME>d73827_ex-2.txt
<DESCRIPTION>JOINT FILING AGREEMENT (RESTATED)
<TEXT>
EXHIBIT 2:
JOINT FILING AGREEMENT (RESTATED)
WHEREAS, the undersigned (collectively, the "Reporting Persons") from time
to time make filings with the Securities and Exchange Commission pursuant to
Regulation 13D-G under the Securities Exchange Act of 1934, as amended; and
WHEREAS, the Reporting Persons prefer to make joint filings on behalf of
all Reporting Persons rather than individual filings on behalf of each of the
Reporting Persons;
NOW, THEREFORE, the undersigned hereby agree as follows with each of the
other Reporting Persons:
1. Each of the Reporting Persons is individually eligible to make joint
filings.
2. Each of the Reporting Persons is responsible for timely making joint
filings and any amendments thereto.
3. Each of the Reporting Persons is responsible for the completeness and
accuracy of the information concerning such person contained in joint filings.
4. None of the Reporting Persons is responsible for the completeness or
accuracy of the information concerning the other Reporting Persons contained in
joint filings, unless such person knows or has reason to believe that such
information is inaccurate.
5. This Joint Filing Agreement amends, restates and supersedes the Joint
Filing Agreement (Restated) dated August 3, 2007 by and among certain of the
undersigned, but only as to those filings to be made by all Reporting Persons.
13
<PAGE>
6. The undersigned agree that each joint filing made on or after the date
hereof will be, and any amendment thereto will be, made on behalf of each of the
Reporting Persons.
D3 Family Fund, L.P., D3 Bulldog Fund,
L.P. and D3 Family Canadian Fund, L.P.
By: Nierenberg Investment Management
Company, Inc.
Its: General Partner
March 5, 2008 By:
------------------------------------
David Nierenberg, President
DIII Offshore Fund, L.P.
By: Nierenberg Investment Management
Offshore, Inc.
Its: General Partner
March 5, 2008 By:
------------------------------------
David Nierenberg, President
Nierenberg Investment Management
Company, Inc.
March 5, 2008 By:
------------------------------------
David Nierenberg, President
Nierenberg Investment Management
Offshore, Inc.
March 5, 2008 By:
------------------------------------
David Nierenberg, President
</TEXT>
</DOCUMENT>
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