Tenet Restructures Board, Shareholder Plan Amid Departures

Dallas-based Tenet Healthcare Corp. is restructuring its board of directors after the announced departure of Trevor Fetter, its longtime CEO, chairman, and director, and the resignation of two other board members. The company said it will “refresh the composition of its board.”

Within a short period of time, two of Tenet’s board members—Randy Simpson and Matt Ripperger, who served as partners and co-heads of healthcare for New York-based hedge fund Glenview Capital Management, Tenet’s largest shareholder—left the organization, and Fetter, Tenet’s chief executive since 2003, announced his retirement. Simpson and Ripperger wrote a joint letter announcing their departure. Fetter announced his parting in an internal memo to the company before Tenet issued a public statement.

As Tenet goes about its housekeeping, the company has appointed Ronald Rittenmeyer, who most recently served as Tenet’s independent lead director, as its new executive chairman. No other board changes have been announced. The company has not stated how many board members will be kept or replaced, but said it “expects to further enhance the board’s expertise in areas directly relevant to the company’s business.”

Additionally, Tenet has devised a short-term shareholder rights plan, which was approved by the board last Thursday. The plan was spurred after Simpson and Ripperger’s exit was announced on Aug. 17, causing the expiration of a so-called standstill agreement. In exchange for adding the pair to the board last year, Glenview reportedly agreed not to up its stake in Tenet, or join any other investor looking to force Tenet’s sale.

The company said its new shareholders rights plan aims to protect its $1.7 billion in net operating loss carry-forwards (expenses on Tenet’s tax return that can be used to offset taxable income for the next 20 years). The plan will also “ensure that the board can protect all shareholder interests … as it evaluates the best path forward for the company.”

Tenet said in a statement regarding the rights plan: “If any person or entity acquires a position in 4.9% or more of the Company’s outstanding common stock, all holders of rights issued under the plan (other than any triggering person) will be entitled to acquire shares of common stock at a 50% discount, or the Company may exchange each right held by such holders for one share of common stock. Under the rights plan, any person or entity that currently owns more than 4.9% of the Company’s outstanding common stock may continue to own its shares of common stock, but may not acquire a position in any additional shares without triggering the rights plan.”

The plan will expire after the company’s annual stockholder meeting.

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