Amadeusz Juskowiak

Pesch sees shareholder support in ami ami bid

Chicago physician LeRoy Pesch said he has had discussions with several American Medical International Inc shareholders and sees support for a restructuring of the company

Pesch said he has discussed his sweetened 191 billion dlr takeover bid for American Medical with several large shareholders including the biggest investor the Bass family of Texas However the Bass family has not indicated support one way or the other for his offer he said

Pesch in an interview with Reuters said based on the conversations he held with shareholders he could not guage whether he had majority support He said however there is support for his offer

Pesch would not identify shareholders with whom he held discussions other than the Bass family and the Wedge Group Inc the only other holder of more than five pct of American Medical stock

Earlier today Wedge Group which has a 55 pct stake said it held discussions with Pesch American Medical management and other American Medical shareholders

Wedge in a filing with the Securities and Exchange Commission said it believes a restructuring of American Medical and its business would be highly desirable and appropriate at this time

Thats the sort of position that I find a large segment of shareholders of AMI really share said Pesch

Pesch said he held discussions with Wedge about joining his takeover effort in which he is offering 17 dlrs cash four dlrs in preferred stock and one dlr in common stock for each American Medical share Wedge said it has no plans to join in an effort to seek control of American Medical but it would not rule out a future takeover try

Pesch said he did not discuss a joint takeover proposal with the Bass family

Some analysts saw the Wedge statement as a boost to Peschs takeover effort and a further sign that there could be some shareholder dissatisfaction following American Medicals previous rejection of a 20 dlr per share all cash offer from Pesch

American Medical is expected to resist Peschs latest bid Larry Feinberg an analyst with Dean Witter Reynolds Inc said a managementled leveraged buyout cannot be ruled out

An American Medical spokesman said the company will comment on the new Pesch offer by March 10

Analysts continue to view the Bass family as a factor in the outcome of the bid for control of American Medical

The Bass family holds an 11 6 pct stake in American Medical and the company has previously said the investors support managements internal plan to improve the companys performance The Bass family would not comment on American Medical or Pesch

Pesch who led the leveraged buyout of Republic Health Corp last year continues to face a credibilty problem on Wall Street because of the long time it took to finish the Republic acquisition

Republic also has substantial debt and has left wall street questioning whether financing can be completed for the much larger American Medical takeover proposal

Peschs first offer for American Medical was made without an investment banking firm another cause for concern to Wall Street However Pesch entered his second offer with representation from Donaldson Lufkin and Jenrette Securities and Security Pacific Merchant Banking Group

I dont have any doubt that the current transaction can be worked out and completed provided we get to the point where Ami management will sit down and talk in a friendly environment Pesch said

Pesch would not elaborate on what type of financing arrangements are being made He did say if he succeeds in acquiring American Medical he plans to keep much of American Medical management in place

He said he plans to combine the company with Republic to form an efficient network of hospitals

Analysts said they do not believe a much higher offer could be made for American Medical

Byron Nimocks of EF Hutton Group said improved second fiscal quarter earnings could make American Medical stock worth about 20 dlrs per share

Nimocks estimates American Medical earnings for the second quarter ended February 28 could be 35 cts compared to a 95 ct loss last year

Nimocks said Peschs revised offer is not worth much more than the 20 dlrs cash offered previously

But Feinberg said there is a better chance a transaction could be completed because of the revised structure of the offer I think its much more doable he said

Analysts have said American Medical has begun a turnaround by replacing some members of management and reducing costs

Reuter