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Sun Healthcare Group, Inc. Should Be Sold, Says Large Institutional Investor

Stocks in this article: SBRA SUNH

NEW YORK, Dec. 12, 2011 /PRNewswire/ -- Clinton Group, Inc., the investment manager for Clinton Magnolia Master Fund, Ltd. ("Clinton"), one of the largest investors in Sun Healthcare Group, Inc. (NASDAQ: SUNH) ("Sun"), sent a letter to the Board of Directors of Sun to urge the Board to sell the company.

In particular the letter noted that:

  • Clinton believes Sun is undervalued in the public markets;
  • Clinton believes Sun has sufficient liquidity, could continue to successfully operate as a standalone business, and has access the debt markets for refinancing; but
  • Clinton believes a sale today would maximize shareholder value because such a sale would likely yield Sun shareholders a price in the $6-8 range, given that the likely buyers could save substantial operating and back-office costs, trade at higher multiples, and have more scale than Sun.

A complete copy of the letter sent by Clinton to Sun is attached.


About Clinton Group, Inc.

Clinton Group, Inc. is a diversified asset management firm with approximately $2.5 billion in assets under management. The firm has been investing in global markets since its inception in 1991 with expertise that spans a wide range of investment styles and asset classes. Clinton Group is a Registered Investment Advisor based in New York City.


[Clinton Group Letterhead]

December 12, 2011

Board of DirectorsSun Healthcare Group, Inc.18831 Von Karman, Suite 400Irvine, CA  92612

Ladies and Gentlemen:

I write on behalf of Clinton Group, Inc., the investment manager of Clinton Magnolia Master Fund, Ltd. ("Magnolia"), which is a significant owner of the common stock of Sun Healthcare Group, Inc. ("Sun" or the "Company").  Founded in 1991, Clinton Group, Inc. is a SEC Registered Investment Advisor with over $2.5 billion in assets under management.  Based on publicly available information, Magnolia is one of the top 15 shareholders of Sun. 

We are proud owners of the Company and believe the stock is significantly undervalued. The unexpected cuts to Medicare reimbursement rates have severely impacted the Company and its peers.  And while we believe that management responded briskly with a risk mitigation plan that has been effectively communicated to investors, the stock price continues to languish and fails to reflect the true value of Sun's operations.  We believe the time has come to sell the Company to a larger industry participant.

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