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MedCath Corporation Adopts Section 382 Rights Plan

Stocks in this article: MDTH

CHARLOTTE, N.C., June 15, 2011 /PRNewswire/ -- MedCath Corporation (Nasdaq: MDTH), a healthcare provider focused on high acuity healthcare services, today announced that its Board of Directors has adopted a Section 382 rights plan intended to preserve the value of certain of the Company's tax attributes (the "Tax Attributes").

As of June 14, 2011, the Company has Tax Attributes which may entitle the Company to either reduce income taxes that may otherwise become due or to seek a refund of income taxes due with respect to the Company's current 2011 tax year totaling up to as much as approximately $40,000,000 of tax reductions.  However, these Tax Attributes may be materially reduced or eliminated by a "change of ownership" of the Company under Section 382 of the Internal Revenue Code (a "change of ownership"). If a change of ownership were to occur, the actual amount of Tax Attributes that could be materially reduced or eliminated would depend upon various factors, which among others include: (i) when the change of ownership occurred, (ii) the order in which certain hospitals owned by the Company are sold, (iii) the final sale price of certain hospitals owned by the Company  and (iv) the timing of the liquidation of certain of the Company's subsidiary limited liability companies or limited partnerships which have already sold their hospitals. In general, a change of ownership would occur if stockholders that own (or are deemed to own) at least 5 percent or more of the Company's outstanding common stock increased their cumulative ownership in the Company by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period beginning October 1, 2010.

As part of the Plan, the Company's Board of Directors declared a dividend of one preferred stock purchase right on each outstanding share of the Company's common stock. The dividend will be payable to holders of record as of the close of business on June 29, 2011. Shares of the Company's common stock issued after the record date will be issued together with those rights.

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