Sec Form 13D Filing - Mudrick Capital Management L.P. filing for Quorum Health Corp (QHC) - 2020-04-29

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 2)¹

Quorum Health Corporation

(Name of Issuer)

Common Stock, par value $0.0001

(Title of Class of Securities)

74909E106

(CUSIP Number)

STEVE WOLOSKY, ESQ.

OLSHAN FROME WOLOSKY LLP

1325 Avenue of the Americas

New York, New York 10019

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

 

April 29, 2020

(Date of Event Which Requires Filing of This Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.

 

 

1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

	1		NAME OF REPORTING PERSON
				Mudrick Distressed Opportunity Drawdown Fund II, L.P.
	2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP															(a) ☐
																		(b) ☒
	3		SEC USE ONLY
	4		SOURCE OF FUNDS
				WC
	5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)															☐
	6		CITIZENSHIP OR PLACE OF ORGANIZATION
				DELAWARE
NUMBER OF				7		SOLE VOTING POWER
SHARES
BENEFICIALLY							- 0 -
OWNED BY				8		SHARED VOTING POWER
EACH
REPORTING							1,237,424
PERSON WITH				9		SOLE DISPOSITIVE POWER
							- 0 -
				10		SHARED DISPOSITIVE POWER
							1,237,424
	11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
				1,237,424
	12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES															☐
	13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
				3.8%
	14		TYPE OF REPORTING PERSON
				PN

  

	1		NAME OF REPORTING PERSON
				Mudrick Distressed Opportunity Fund Global, L.P.
	2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP															(a) ☐
																		(b) ☒
	3		SEC USE ONLY
	4		SOURCE OF FUNDS
				WC
	5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)															☐
	6		CITIZENSHIP OR PLACE OF ORGANIZATION
				CAYMAN ISLANDS
NUMBER OF				7		SOLE VOTING POWER
SHARES
BENEFICIALLY							- 0 -
OWNED BY				8		SHARED VOTING POWER
EACH
REPORTING							2,115,197
PERSON WITH				9		SOLE DISPOSITIVE POWER
							- 0 -
				10		SHARED DISPOSITIVE POWER
							2,115,197
	11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
				2,115,197
	12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES															☐
	13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
				6.5%
	14		TYPE OF REPORTING PERSON
				PN

  

 

	1		NAME OF REPORTING PERSON
				Mudrick GP, LLC
	2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP															(a) ☐
																		(b) ☒
	3		SEC USE ONLY
	4		SOURCE OF FUNDS
				AF
	5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)															☐
	6		CITIZENSHIP OR PLACE OF ORGANIZATION
				DELAWARE
NUMBER OF				7		SOLE VOTING POWER
SHARES
BENEFICIALLY							- 0 -
OWNED BY				8		SHARED VOTING POWER
EACH
REPORTING							2,115,197
PERSON WITH				9		SOLE DISPOSITIVE POWER
							- 0 -
				10		SHARED DISPOSITIVE POWER
							2,115,197
	11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
				2,115,197
	12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES															☐
	13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
				6.5%
	14		TYPE OF REPORTING PERSON
				OO

  

 

	1		NAME OF REPORTING PERSON
				Mudrick Distressed Opportunity Drawdown Fund II GP, LLC
	2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP															(a) ☐
																		(b) ☒
	3		SEC USE ONLY
	4		SOURCE OF FUNDS
				AF
	5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)															☐
	6		CITIZENSHIP OR PLACE OF ORGANIZATION
				DELAWARE
NUMBER OF				7		SOLE VOTING POWER
SHARES
BENEFICIALLY							- 0 -
OWNED BY				8		SHARED VOTING POWER
EACH
REPORTING							1,237,424
PERSON WITH				9		SOLE DISPOSITIVE POWER
							- 0 -
				10		SHARED DISPOSITIVE POWER
							1,237,424
	11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
				1,237,424
	12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES															☐
	13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
				3.8%
	14		TYPE OF REPORTING PERSON
				OO

  

 

	1		NAME OF REPORTING PERSON
				Mudrick Capital Management, L.P.
	2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP															(a) ☐
																		(b) ☒
	3		SEC USE ONLY
	4		SOURCE OF FUNDS
				WC
	5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)															☐
	6		CITIZENSHIP OR PLACE OF ORGANIZATION
				DELAWARE
NUMBER OF				7		SOLE VOTING POWER
SHARES
BENEFICIALLY							- 0 -
OWNED BY				8		SHARED VOTING POWER
EACH
REPORTING							4,771,592
PERSON WITH				9		SOLE DISPOSITIVE POWER
							- 0 -
				10		SHARED DISPOSITIVE POWER
							4,771,592
	11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
				4,771,592
	12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES															☐
	13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
				14.6%
	14		TYPE OF REPORTING PERSON
				IA

  

 

	1		NAME OF REPORTING PERSON
				Mudrick Capital Management, LLC
	2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP															(a) ☐
																		(b) ☒
	3		SEC USE ONLY
	4		SOURCE OF FUNDS
				AF
	5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)															☐
	6		CITIZENSHIP OR PLACE OF ORGANIZATION
				DELAWARE
NUMBER OF				7		SOLE VOTING POWER
SHARES
BENEFICIALLY							- 0 -
OWNED BY				8		SHARED VOTING POWER
EACH
REPORTING							4,771,592
PERSON WITH				9		SOLE DISPOSITIVE POWER
							- 0 -
				10		SHARED DISPOSITIVE POWER
							4,771,592
	11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
				4,771,592
	12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES															☐
	13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
				14.6%
	14		TYPE OF REPORTING PERSON
				OO

  

 

	1		NAME OF REPORTING PERSON
				Jason Mudrick
	2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP															(a) ☐
																		(b) ☒
	3		SEC USE ONLY
	4		SOURCE OF FUNDS
				AF
	5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)															☐
	6		CITIZENSHIP OR PLACE OF ORGANIZATION
				United States of America
NUMBER OF				7		SOLE VOTING POWER
SHARES
BENEFICIALLY							- 0 -
OWNED BY				8		SHARED VOTING POWER
EACH
REPORTING							4,771,592
PERSON WITH				9		SOLE DISPOSITIVE POWER
							- 0 -
				10		SHARED DISPOSITIVE POWER
							4,771,592
	11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
				4,771,592
	12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES															☐
	13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
				14.6%
	14		TYPE OF REPORTING PERSON
				IN

  

The following constitutes Amendment No. 2 to the Schedule 13D filed by the undersigned (“Amendment No. 2”). This Amendment No. 2 amends the Schedule 13D as specifically set forth herein.

Item 4.

Purpose of Transaction.

Item 4 is hereby amended to add the following:

On April 29, 2020, the Reporting Persons’ legal counsel delivered a letter (the “Letter”) to the Issuer’s board of directors (the “Board”) on behalf of the Reporting Persons, requesting that the Board exercise its “fiduciary out” and terminate the Restructuring Support Agreement (the “RSA”) currently restricting the Issuer. The Letter stated that, once the RSA is terminated, the Issuer may quickly engage with Mudrick, the Issuer’s largest unconflicted shareholder, and modify its proposed Plan of Reorganization (the “Plan”) to provide for a proper shareholder recovery.

In the Letter, the Reporting Persons questioned how the Board could have concluded in an April 6, 2020 Board resolution that the RSA and Plan were “desirable and in the best interests of” shareholders even though they would have the effect of canceling the Issuer’s equity. The Letter noted significant changes in circumstances since the Board signed the RSA on April 6, 2020, including recent Federal government action that has markedly and materially increased the Issuer’s value, such as The CARES Act Provider Relief Fund (the “Provider Relief Fund”) and the Health Care Enhancement Act. The Letter stated the Reporting Persons’ belief that the Plan’s valuation is now factually and legally stale, and that the Board can no longer support it, because the Issuer can now request hundreds of millions of dollars in grants that it had no expectation of receiving when it entered into the RSA. The Letter further stated the Reporting Persons’ belief that if the Issuer proceeds with the RSA and the Plan, potentially hundreds of millions of dollars in equity value and the additional benefits that that liquidity provides – on top of the pre-Provider Relief Fund substantial equity value – will transfer from the Issuer’s shareholders to its Senior Noteholders. The Reporting Persons called upon the Board to exercise its fiduciary obligations under the RSA to protect shareholders from these changed facts and circumstances by discontinuing prosecution of the Plan.

The Letter noted that the Reporting Persons have clearly and consistently expressed their view that the Issuer is decidedly solvent and that the Board’s fiduciary duties run “unyieldingly” to its shareholders. The Letter further stated the Reporting Persons’ belief that the Issuer’s acceptance of Federal grants to remain decidedly solvent while eliminating public shareholders not only breaches the Board’s fiduciary duty, it smacks of bad faith, since the Provider Relief Fund was intended to maintain providers as solvent going concerns today. The Reporting Persons further stated in the Letter that, in addition to terminating the RSA, dismissal of the Issuer’s bankruptcy cases may now be in the best interest of the Issuer, its shareholders and all of its stakeholders, since these cases may jeopardize the Issuer’s ability to receive the maximum amount of liquidity from funds already available under the Medicare Accelerated and Advance Payment Programs. The Reporting Persons stated their belief that by continuing with this bankruptcy to foreclose or strategically delay the Issuer’s opportunity for the benefit of the Senior Noteholders, it would become clear that the only purpose of these cases is to wipe out equity at either the cost of or in order to transfer to the Senior Noteholders the benefit of hundreds of millions of dollars in interest-free loans, while also taking hundreds of millions of dollars in grant money and transferring it to the Senior Noteholders.

The Reporting Persons concluded the Letter by stating that they filed four sets of papers on April 29, 2020: (1) a motion to continue the confirmation hearing; (2) preliminary objections to confirmation of the Plan; (3) a motion for the appointment of an Official Equity Committee; and (4) an objection to further approval of DIP financing.

The foregoing description of the Letter does not purport to be complete and is qualified in its entirety by reference to the full text of the Letter, which is filed as Exhibit 99.1, and is incorporated herein by reference.

Item 7.

Material to be Filed as Exhibits.

Item 7 is hereby amended to add the following exhibits:

99.1

Letter to the Board of Directors of Quorum Health Corporation, dated April 29, 2020.

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: April 29, 2020.

	MUDRICK DISTRESSED OPPORTUNITY DRAWDOWN FUND II, L.P.
	By:	Mudrick Distressed Opportunity Drawdown Fund II GP, LLC, its general partner
	By:	/s/ Jason Mudrick
		Name:	Jason Mudrick
		Title:	Sole Member

 

	MUDRICK DISTRESSED OPPORTUNITY FUND GLOBAL, L.P.
	By:	Mudrick GP, LLC, its general partner
	By:	/s/ Jason Mudrick
		Name:	Jason Mudrick
		Title:	Sole Member

 

	MUDRICK GP, LLC
	By:	/s/ Jason Mudrick
		Name:	Jason Mudrick
		Title:	Sole Member

 

	MUDRICK DISTRESSED OPPORTUNITY DRAWDOWN FUND II GP, LLC
	By:	/s/ Jason Mudrick
		Name:	Jason Mudrick
		Title:	Sole Member

 

	MUDRICK CAPITAL MANAGEMENT, L.P.
	By:	Mudrick Capital Management, LLC, its general partner
	By:	/s/ Jason Mudrick
		Name:	Jason Mudrick
		Title:	Sole Member

 

	MUDRICK CAPITAL MANAGEMENT, LLC
	By:	/s/ Jason Mudrick
		Name:	Jason Mudrick
		Title:	Sole Member

 

	/s/ Jason Mudrick
	JASON MUDRICK