Brigade Capital disclosed a 5.8% stake in Kindred Healthcare (KND) and expressed opposition to the company’s proposed buyout by TPG Capital, Welsh, Carson, Anderson & Stowe and Humana (HUM).

Representatives of Brigade intend to engage in discussions with Kindred’s management and board regarding, among other things, the company’s strategic alternatives and direction, and strategies to enhance shareholder value, including regarding the recently announced proposed acquisition. On December 27, Brigade delivered a letter to the board stating its opposition to the takeover and noting the “material inadequacy of the terms of the proposed transaction.” Brigade’s belief is that the $9.00 per share cash merger price “significantly undervalues” Kindred’s common stock. The Letter notes that from the perspective of maximizing shareholder value, Brigade believes it is premature for Kindred to engage in a sale transaction. Over the past year, Brigade noted that the company “has overcome numerous challenges and calmed most of the headwinds against its business, positioning it for substantial stock price appreciation in 2018 and beyond.”

The activist added, “Brigade expected management to continue operating the business to enable the shareholders who have patiently supported the Issuer throughout its challenges to realize the benefits of the business improvements through their continued ownership in the going concern. Instead, Brigade stated in the Letter, that it believes management has chosen to pursue a transaction with the Consortium that severely undervalues the Issuer and ensures that the Consortium – rather than existing shareholders – will reap the benefits of the value enhancement the improved business is expected to generate. For these and the reasons stated in the Letter, Brigade advised the Issuer that it does not believe the proposed transaction is in the best interests of the Issuer’s shareholders and intends to actively oppose it.”