Thursday, May 24, 2007

thoughts on sen. frist as a possible world bank official. . .

i sure hope there is a fully-vetted discussion
of this (tom frist’s — his brother’s) dealings
in the stock of HCA — on behalf of the family,
prior to the below-transaction. the allegations
included trading in advance of the announcement
of the $30-some-billion in aggregate value transaction,
and the delayed-disclosure of disposal of frist-entity
interests — hundreds of millions of dollars worth — per
the SEC EDGAR data-base — from that time:

. . .On November 8, 2006, HCA Inc., a Delaware corporation (“HCA”), issued the press release attached hereto as Exhibit 99.1 in which HCA announced that HCA and the other named parties have entered into a memorandum of understanding with plaintiffs’ counsel in connection with six purported class action lawsuits, previously consolidated, filed in the Chancery Court for Davidson County, Tennessee in connection with the proposed acquisition of HCA by affiliates of Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and HCA Founder Dr. Thomas F. Frist, Jr.

Under the terms of the memorandum, HCA, the other named parties and the plaintiffs have agreed to settle the lawsuit subject to court approval. If the court approves the settlement contemplated in the memorandum, the lawsuit will be dismissed with prejudice. HCA and the other defendants deny all of the allegations in the lawsuit. Pursuant to the terms of the memorandum, Hercules Holding II, LLC, the entity formed by the investor group in connection with the proposed transaction, has agreed to waive that portion in excess of $220 million of any termination fee that it has a right to receive under the merger agreement. Also, HCA and the other parties have agreed not to assert that a shareholder’s demand for appraisal is untimely under Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”) where such shareholder has submitted a written demand for appraisal within 30 calendar days of the shareholders meeting held to adopt the merger agreement (with any such deadline being extended to the following business day should the 30th day fall on a holiday or weekend). HCA and the other parties also have agreed not to assert that (i) the surviving corporation in the merger or a shareholder who is entitled to appraisal rights may not file a petition in the Court of Chancery of the State of Delaware demanding a determination of the value of the shares held by all such shareholders if such petition is not filed within 120 days of the effective time of the merger so long as such petition is filed within 150 days of the effective time, (ii) a shareholder may not withdraw such shareholder’s demand for appraisal and accept the terms offered by the merger if such withdrawal is not made within 60 days of the effective time of the merger so long as such withdrawal is made within 90 days of the effective time of the merger, and (iii) that a shareholder may not, upon written request, receive from the surviving corporation a statement setting forth the aggregate number of shares not voted in favor of the merger with respect to which demands for appraisal have been received and the aggregate number of holders of such shares if such request is not made within 120 days of the effective time of the merger so long as such request is made within 150 days of the effective time.

The memorandum will be null and void and of no force and effect if the merger is not approved by the affirmative vote of a majority of the shares of common stock outstanding and entitled to vote at the meeting, the merger agreement is terminated under circumstances where the merger has not been previously consummated or final court approval of the settlement of the aforementioned class action lawsuits does not occur for any reason. In addition, the plaintiffs will have the right to terminate the memorandum if a majority of the shares voted on the proposal to adopt the merger agreement (excluding shares held by Dr. Frist and certain entities affiliated with Dr. Frist) are not voted “for” such proposal. . .

The section of the proxy statement entitled “Special Factors — Litigation Related to the Merger” is hereby supplemented as follows:

The Company believes that, under Delaware law, the consummation of the merger will terminate shareholders’ equity interest in the Company and thereby extinguish the shareholder derivative claims asserted in Raymond Lynch, Derivatively on Behalf of HCA Inc. v. Jack O. Bovender, Jr., et. al. and HCA Inc., Civil Action No. 06C127 (pending in the Circuit Court for the State of Tennessee, 20th Judicial District Davidson County, at Nashville), and In re HCA, Inc. Derivative Litigation, No. 3:05-0968 (pending in the United States District Court for the Middle District of Tennessee, at Nashville) (collectively, the “Derivative Cases”). The Company has engaged in discussions with the shareholder plaintiffs in the Derivative Cases regarding the extinguishment of their cases and the plaintiffs have indicated that they disagree with the Company’s interpretation of Delaware law. In connection with the entry into the Memorandum of Understanding, the Company has determined that it is in the Company’s best interest to settle the Derivative Cases and has agreed in principle to do so. . .

In addition, pursuant to the terms of the memorandum, HCA has agreed to provide additional information to shareholders through publicly available filings in order to supplement the proxy statement that has been provided to HCA’s shareholders in connection with the special meeting of shareholders concerning the proposed merger to occur on November 16, 2006, at 11:00 a.m., local time, at HCA’s executive offices located at One Park Plaza, Nashville, Tennessee 37203. HCA has filed the supplemental disclosures with the Securities and Exchange Commission, but HCA does not make any admission that such supplemental disclosures are material. . .

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