1
EXHIBIT (a)(19)
[LETTERHEAD OF SWIDLER BERLIN SHEREFF FRIEDMAN, LLP]
February 12, 1999
VIA FAX: (213) 687-3702
The Board of Directors of COHR, Inc.
c/o Robert B. Knauss, Esq.
Munger, Tolles & Olsen
355 South Grand Avenue
35th Floor
Los Angeles, California 90071
Re: Managed Health Care Associates, Inc./COHR, Inc.
Dear Rob:
MHA is stunned by the recent announcement of an agreement whereby COHR,
Inc. ("COHR" or the "Company") agreed to amend its previously executed merger
agreement with TCF Acquisition Corporation ("TCF") and accept a revised purchase
price of $6.50 per share when MHA was offering $7.00 per share. The Company's
express concern as stated in its press release of February 5, 1999 concerning
the due diligence contingency contained in MHA's proposal is inaccurate. MHA's
proposal was submitted to the COHR directors on February 2, 1999. In response to
a request from the COHR Board, MHA made it clear that it would seek to negotiate
and sign a merger agreement, without a due diligence or financing contingency,
on or prior to February 10, 1999. Since the TCF merger agreement executed on
December 24, 1999 allowed the COHR directors ten business days from their
receipt of a Superior Proposal (as defined in the TCF merger agreement) to
notify TCF, COHR was never at risk of losing TCF as a $6.50 per share purchaser
without having MHA as a $7.00 per share replacement purchaser. That the COHR
directors did not even attempt to complete the MHA merger agreement is
surprising, particularly since those same directors had just characterized the
MHA proposal as a Superior Proposal.
MHA is prepared to pay $7.50 per share for each outstanding share of
common stock of the Company. MHA remains prepared to execute a merger agreement
in substantially the form previously provided to you. Such agreement would
contain no due diligence or financing contingency. Such agreement would also
provide for a tender offer followed by a merger. MHA understands that pursuant
to the revised merger agreement with TCF, based upon the information available
to MHA, the Company is precluded from accepting or even considering such an
offer. Given the history of the transaction, we question whether such a
preclusion is enforceable under Delaware law. Moreover, it is not clear whether
the revised merger agreement contains any other provisions which would permit
COHR to accept a superior proposal.
MHA would like to review, for the record, the conduct of the Company in
connection with the sale of the Company. Beginning in June 1998, there were
numerous conversations between Messrs. Ritterbush and List (two senior executive
officers and directors), on the one hand, and various representatives of MHA, on
the other. During November and early December 1998, MHA, at the urging of
various officers of the Company, attempted to meet with Mr. Ritterbush. Meetings
were set for December 2, 1998 and December 17, 1998. On each occasion, Mr.
Ritterbush rescheduled the meeting. On December 22, 1998, Mr. Ritterbush finally
met at MHA's corporate offices with several MHA directors. At that meeting, MHA
informed Mr. Ritterbush that it was prepared to pay $8.00 cash for each
outstanding share of Company common stock. At the conclusion of the meeting, Mr.
Ritterbush said that Mr. List, the Company's President and Chief Executive
Officer,
1
2
desired to meet with MHA the following week while he was on the east coast, in
order to continue these discussions. As a result, MHA was startled at the
Company's announcement, two days later, on December 24, 1998, that it had signed
a merger agreement providing for the sale of the Company for a price of only
$5.375 per share (or $6.375 per share if the existing shareholders litigation
were settled on specified conditions). MHA was surprised also, that none of the
disclosure documents filed in connection with the proposed sale and tender offer
made any reference to either MHA's initial $45 million offer for the Company's
Purchase Connection division in the spring of 1998 or to its more recent
proposal of $8.00 per share. To make matters worse, MHA learned in the following
two weeks that none of the COHR directors (other than Messrs. Ritterbush and
List) had ever been informed about MHA's December 1998 conversations or
meetings. Furthermore, the Company's press release issued on December 24, 1998
failed to publicly state that the TCF Merger Agreement permitted the Company to
entertain superior proposals, which delayed MHA's formulation of a
counter-proposal.
On January 6, 1999, a full 13 days after the announcement of the
transaction with TCF and the other Three Cities entities (collectively, "Three
Cities"), MHA through the public filings first learned of all of the terms of
the TCF merger agreement. Those documents, filed by Three Cities, failed to
mention that Messrs. Ritterbush and List, two of COHR's senior executive
officers and members of the Board, were going to continue to manage the Company
upon the consummation of the Three Cities transaction.
Upon review by MHA of the TCF merger agreement, MHA still attempted to
comply with its terms, even though the unusual right to match so tipped the
balance in Three Cities' favor as to make a level playing field impossible. MHA
submitted letters on January 25, 1999 and January 26, 1999, offering to pay
$8.00 per share in cash and seeking an opportunity to complete a due diligence
investigation. MHA commenced due diligence on January 27, 1999. On February 2,
1999, as a consequence of new information learned during its due diligence
investigation, MHA reduced its offer and stated that it would pay $7.00 per
share in cash. MHA was informed that it had complied with the terms of the TCF
merger agreement and had submitted a Superior Proposal (as defined in the TCF
merger agreement). On February 3,1999, MHA submitted a draft merger agreement to
the Company. As noted previously in this letter, a clear reading of the TCF
merger agreement states that once a Superior Proposal is received, the Company
has ten business days to determine whether to accept that proposal.
Representatives of MHA made it very clear to the representatives of the Company
that MHA was prepared to negotiate its draft merger agreement to completion, no
later than February 10, 1999. At that time, MHA acknowledged to the Company that
such completed agreement would have no due diligence or financing contingencies.
The suggestion in the Company's press release dated February 5, 1999, that MHA's
proposal was subject to due diligence is inaccurate because on February 10, 1999
there would have been no such contingencies. Consequently the Board would have
been in a position to choose between an offer of $6.50 a share and an offer of
$7.00 per share, with all other terms being materially identical. The Board,
inexplicably, rushed to accept a revised offer by Three Cities which was $.50
per share less than MHA's offer.
MHA intends to pursue a transaction to purchase the Company at $7.50 per
share. MHA believes the Board should take a careful look at these facts.
Very truly yours,
Charles I. Weissman
CIW:slc
2