Covington Investments, LLC Issues Open Letter to Shareholders of Advocat - Comments on Announced Acquisition of Sun Healthcare

_{//health-fitness.news-articles.net/content/2012/ .. -on-announced-acquisition-of-sun-healthcare.html}
^{Published in Health and Fitness on Monday, June 25th 2012 at 10:10 GMT by Market Wire}  

Covington Investments, LLC Issues Open Letter to Shareholders of Advocat - Comments on... -- ATLANTA, June 25, 2012 /PRNewswire/ --

[ ]

My news for Investors

AtLeast one of the check box should be selected You are following news about Follow the latest news about AVCA
Follow the latest news about SUNH

ATLANTA, June 25, 2012 /PRNewswire/ -- Covington Investments, LLC ("Covington") today issued the following open letter to the shareholders of Advocat, Inc. (NASDAQ: [ AVCA ]), (the "Company") regarding the announced acquisition of Sun Healthcare Group, Inc. (NASDAQ: [ SUNH ]) ("Sun Healthcare") by Genesis HealthCare, LLC ("Genesis"):

Dear Fellow Shareholder:

On June 20, 2012, Sun Healthcare announced that it had agreed to be acquired by Genesis for $8.50 per share in cash.  We wanted to bring this to the attention of Advocat shareholders as it is a further illustration that the Board of Directors of Advocat is not acting in the best interests of all shareholders by refusing to enter into discussions with Covington regarding its proposal to acquire the Company.  There are significant similarities between the two proposed transactions.

Sun Healthcare is a publically traded skilled nursing facility company with over $1.9 billion in revenues and a market value (prior to the announcement) of approximately $157 million.  Genesis is a privately owned skilled nursing care provider.  The implied transaction multiples for the Genesis-Sun Healthcare deal compared with Covington's proposal to Advocat are set out in the table below.  In all respects, Covington's offer values Advocat at substantially higher multiples than the Genesis-Sun Healthcare multiples.

[1] L12M refers to latest twelve months as of March 31, 2012. Adjusted enterprise value = market value of equity + preferred stock + debt (excluding debt associated with West Virginia (for Advocat)) + lease expense capitalized using a 12.5% cap rate – cash.

Sun Healthcare's Board of Directors unanimously approved the transaction with Genesis.  In contrast, Advocat's Board of Directors refuses to even enter into discussions regarding a proposal that has much higher valuation multiples and despite the fact that Advocat is a much smaller company with significantly less trading liquidity.

Please join us in expressing your views to Advocat in light of the Genesis – Sun Healthcare announcement.  We encourage you to call or write the directors and management urging them to engage in meaningful discussions with Covington regarding its proposal to acquire the Company.  As stated previously, we remain interested in a mutually agreeable and negotiated transaction.

Sincerely,
/SIG/
John E. McMullan
President
Covington Investments, LLC

About Covington Investments, LLC

Covington's affiliates own and operate continuing care retirement communities offering skilled nursing, assisted living, independent living and home health services in Florida, Ohio, and Tennessee. The Companies' combined campuses comprise over 1,000 skilled nursing and assisted living beds as well as nearly 600 independent living units.

SOURCE Covington Investments, LLC