Northstar Healthcare Issues Notice of Change in respect of Unsolicited
Takeover Bid

TORONTO and HOUSTON, TX, July 19 /CNW/ - Northstar Healthcare Inc. ("Northstar" or the "Company") (TSX:NHC) today announced it has issued a Notice of Change to the Directors' Circular in respect of the unsolicited offer (the "Offer") by Canada Healthcare Acquisition Inc. (the "Offeror"), a corporation indirectly controlled by Dr. Donald L. Kramer, a former CEO and former director of Northstar, to acquire all the issued and outstanding common shares of the Company for Cdn $0.95 per common share. Northstar's Notice of Change was mailed to Northstar shareholders today and has been filed on SEDAR ( Shareholders are urged to read the Notice of Change in its entirety.

The board of directors of Northstar (the "Board"), with the benefit of advice from the special committee of independent directors established by the Board (the "Special Committee"), its legal advisors and Canaccord Genuity Corp., the financial advisor to the Board, and after having carefully reviewed and considered the Offer and the Company's other available alternatives, has unanimously decided NOT TO MAKE A RECOMMENDATION with respect to the acceptance or non-acceptance of the Offer.

The following is a summary of the principal reasons for the unanimous decision by the Board to make no recommendation in respect of the Offer, which are described in greater detail in the Notice of Change:

    Reasons why the Board has not Recommended Rejection of the Offer

    -   The Offer of $0.95 per Share represents a premium of approximately
        44% to the closing price of the Shares of $0.66 on the TSX on May 4,
        2010, the last trading date prior to the announcement of the Offer,
        and a premium of 2.1% to the Shares' trailing 12-month weighted
        average trading price of $0.93.
    -   The Fairness Opinion concludes that the consideration offered under
        the Offer is fair, from a financial point of view, to Shareholders.
    -   Northstar may not be able to realize on the value of its claims
        against Dr. Kramer and his related entities on a timely basis, or at
    -   Northstar is currently operating at a loss and its ability to
        continue as a going concern is uncertain. In addition, Northstar will
        be required to use all of its available corporate cash to make
        certain material payments in the event the Offer is successful.
    -   There can be no assurances of future liquidity opportunities for the
        Shares if the Offer is not successful.
    -   The Board of Directors does not expect a superior offer to emerge on
        a timely basis.

    Reasons the Board has not Recommended Acceptance of the Offer

    -   The Offer is highly conditional to the benefit of Dr. Kramer. In
        total, there are 13 conditions, many of which, if not satisfied or
        waived, would permit Dr. Kramer to terminate the Offer virtually at
    -   The Offer is coercive, in that its minimum tender threshold of only
        50% +1, leaves Shareholders who may not wish to tender in the
        position of not knowing whether they will have a liquid market
        available to them after the Offer is completed (if it is completed)
        and also not knowing whether they will have a further opportunity to
        dispose of their Shares to Dr. Kramer once the Offer expires.
    -   Dr. Kramer has timed his Offer so that it will expire prior to the
        expected date of resolution of Northstar's arbitration proceedings
        against him. This time frame denies Shareholders the opportunity to
        consider the outcome of those proceedings, as well as Northstar's
        developing circumstances, and make a reasoned and informed investment
        decision. Moreover, it could deny Shareholders the opportunity to
        benefit from a positive outcome to the arbitration.
    -   The Board has been informed that, as of the date of the Notice of
        Change, none of the Directors or senior officers of Northstar has
        accepted or intends to accept the Offer. However, in the event the
        minimum tender condition is achieved and Dr. Kramer takes up a
        majority of the Shares, the Directors and senior officers of
        Northstar have indicated that they would consider tendering their
        Shares during the subsequent 10-business day extension period
        provided under the Offer.
    -   Notwithstanding that the Board does not expect a superior offer to
        emerge prior to the expiry time of the offer, the Board and the
        Special Committee, together with Northstar's management, the
        Financial Advisor and legal advisors, are working to pursue a
        strategy to generate value for Shareholders.
    -   Acceptance or non-acceptance may be appropriate for different
        Shareholders, depending on their individual circumstances.

Although no action is required at this time, if the minimum tender condition is met and the Offeror takes up a majority of the Shares pursuant to the Offer, the Board strongly advises Shareholders to consider tendering to the Offer during the subsequent 10-business day extension period provided for in the Offer. Shareholders who do not tender their Shares to the Offer during this 10-business day period following Dr. Kramer's acquisition of a majority of the Shares will become minority shareholders of Northstar. It is likely that the liquidity of the remaining Shares held by non-tendering Shareholders would be reduced substantially under such circumstances.

In addition, non-tendering Shareholders would be shareholders of a company that is controlled by, and has at least a majority of its directors designated by, Dr. Kramer. The Board of Directors believes that Dr. Kramer intends to abandon Northstar's various claims against him and his related entities in the event he acquires a majority of the Shares. This would remove from the Company assets that the Board believes represent substantial potential value for the Company. The Board is also not aware of the terms or availability of any financing which the Offeror will be required to arrange for Northstar to fund its working capital requirements in the event the Offer is successful and substantially all of the Company's corporate cash is depleted, or the impact of any such financing on the minority shareholders. For these reasons, among others, the Board of Directors strongly encourages Shareholders who do not initially tender their Shares to the Offer to consider doing so during the additional 10 business days provided for in the Offer in the event the minimum tender condition is met and Dr. Kramer takes up a majority of the Shares.

The Offer remains open for acceptance until 5:00 p.m. (Toronto time) on July 26, 2010, unless extended or withdrawn, and is subject to a number of conditions.

    About Northstar Healthcare Inc.

Northstar owns and/or manages ambulatory surgery centres in the United States, focusing initially on Houston and other metropolitan areas in Texas. The Company currently holds interests in two ambulatory surgery centres in Houston - a 70% partnership interest in The Palladium for Surgery - Houston and a 60% partnership interest in Medical Ambulatory Surgical Suites.

    Forward-looking statements

This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to business of the Company and the environment in which it operates. Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Forward-looking information in this news release includes, without limitation, statements made in respect of the ongoing claims against Dr. Kramer and his related entities, potential options and alternatives to the Offer that may be available to maximize shareholder value, and other statements regarding management's beliefs, intentions, results, performance, goals, achievements, future events, plans and objects.

All forward-looking statements in this news release are qualified by these cautionary statements. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, should not be unduly relied upon and will not necessarily be accurate indications of whether or not such results will be achieved. Factors that could cause actual results to differ materially from the results discussed in the forward-looking statements, include, but are not limited to Northstar obtaining a favourable ruling in claims against Dr. Kramer and his related entities and the timing of any collection of an award of damages and the possible sale of one or more of the assets of Northstar. Forward-looking information is based on various material factors or assumptions, which are based on information currently available to Northstar. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to procedural matters associated with the ongoing arbitration claims against Dr. Kramer or an appeal by Dr. Kramer of an ultimate decision on procedural grounds. Readers are cautioned that the preceding list of material factors or assumptions is not exhaustive. Although the forward-looking statements contained in this news release are based upon what management believes are reasonable assumptions, Northstar cannot assure readers that actual results will be consistent with these forward-looking statements.

The forward-looking statements contained in this news release are made as of the date of this news release and should not be relied upon as representing Northstar's views as of any date subsequent to the date of this news release. Northstar assumes no obligation to update or revise these forward-looking statements to reflect new information, events, circumstances or otherwise, except as required by applicable law.

%SEDAR: 00025141E

SOURCE Northstar Healthcare Inc.

For further information: For further information: Philip Koven, Tel: (416) 447-4740 Ext. 235, E-mail:

Organization Profile

Northstar Healthcare Inc.

More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890