LOUISVILLE, Ky. (WDRB) --   A large shareholder of Louisville-based Kindred Healthcare says a proposed sale of the company to Louisville-based Humana Inc. and two private equity firms should not go forward because the deal “severely undervalues” Kindred, short-changing its investors. 

In a letter to Kindred’s board and management dated Wednesday,  New York-based Brigade Capital Management said it was “shocked” by the Dec. 19 announcement that Kindred would sell itself for $9 a share, or about $782 million, to buyers who plan to split the company in two.

“Brigade is disappointed that Kindred’s management and board have chosen to move forward with such a poor transaction,” Donald E. Morgan, III, Brigade’s managing member and general partner, wrote in the letter, which was publicly filed with the U.S. Securities and Exchange Commission.

Morgan called the $9-per-share price "grossly inadequate" and "fundamentally inconsistent with management’s own statements regarding (Kindred's) positive outlook."

Brigade and its affiliates control 5.8 percent of Kindred’s stock through shares they own and have options to buy, according to the SEC filing.

A Kindred spokeswoman did not respond to a request for comment on Wednesday.

Brigade’s opposition is potentially significant because Kindred shareholders must approve the proposed sale to Humana and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe. The companies hope to close the sale by mid-2018.

Morgan said he and his company are not the only shareholders who think the sale is a raw deal for Kindred.

“We believe this position is widely held by investors,” according to the letter, which notes that Kindred’s shares have traded above the $9 deal value since the Dec. 19 announcement.

Morgan said Kindred's financial performance has been hamstrung by a number of short-term issues, making it a "terrible time" to price a buyout that fairly values the company's potential.

For example, he said, Kindred's recent sale of its nursing homes puts the company "in position to remove a significant amount of overhead expense" and enjoy higher earnings and cash flow.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2017 WDRB News. All rights reserved.