- Regional Health Properties (RHEP, Financial) and SunLink Health Systems (SSY) have revised their all-stock merger agreement.
- The merger will result in SunLink shareholders owning approximately 45.92% of the combined entity.
- Pre-tax cost synergies of $1.0 million are expected by fiscal 2026.
Regional Health Properties (RHEP) and SunLink Health Systems (SSY) have revised their merger agreement, transitioning to an all-stock deal. The revised terms will see SunLink merge into Regional, receiving approximately 1.59 million shares of Regional common stock and 1.41 million shares of newly-authorized Series D 8% Cumulative Convertible Redeemable Participating Preferred Shares.
Ownership of the combined company will see SunLink shareholders holding approximately 45.92%. The Series D Preferred Stock comes with an initial liquidation preference of $12.50 per share and an 8% annual dividend starting July 2027. Additionally, SunLink retains the right to distribute special dividends up to $1 million before merger finalization.
Post-merger, leadership will be spearheaded by Brent Morrison as CEO, Robert Thornton as EVP of Corporate Strategy, and Mark Stockslager as CFO. The merger, subject to shareholder and regulatory approvals, is slated for completion by summer 2025.
The companies anticipate achieving pre-tax cost synergies of $1.0 million by fiscal 2026. The headquarters for the combined entity will remain in Atlanta, Georgia. The transaction will not prompt changes to control provisions under Regional's mortgages.
SunLink currently holds total assets worth $17.8 million with no long-term debt, enhancing the financial stability of the merger. The merger agreement has been approved by both companies' boards, with no anticipated disruptions to Regional's mortgage arrangements.
