Zinger Key Points
- SunLink shareholders will own approximately 43.0% of the combined company.
- The merger is expected to close in spring 2025, with pre-tax cost synergies of $1M by fiscal 2026.
Regional Health Properties, Inc. RHE and SunLink Health Systems, Inc. SSY shares traded higher after the companies disclosed a merger agreement.
As part of the deal, Regional Health Properties will issue 1.41 million shares of common stock and 1.41 million shares of newly authorized Series D 8% Cumulative Convertible Redeemable Preferred Stock.
Notably, for every five shares of SunLink common stock, Regional will issue one share of common stock and, subject to adjustments, one share of Series D Preferred Stock.
Post-merger, SunLink shareholders will own about 43% of the combined company. The Series D Preferred Stock has a $10 liquidation preference and an 8% annual dividend, starting July 1, 2027. Each three shares of Series D Preferred Stock are convertible into one share of Regional common stock.
Upon shareholder approval, SunLink may pay a special dividend, subject to cash availability. No fractional shares will be issued.
Regional anticipates pre-tax cost synergies of $1 million by the end of its fiscal 2026. The transaction, unanimously approved by both companies’ boards, is expected to close in spring 2025, pending customary conditions.
As of December 31, 2024, SunLink reported $17.6 million in total assets with no long-term debt.
Price Action: RHE shares are up 190.3% at $4.499 and, SSY shares rose 19.2% at $1.085 at the last check Monday.
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