PhillyDeals: Takeover bid for Tenet abandoned

How do you explain to your long-suffering shareholders that you'd rather keep your job, instead of accepting your competitor's aggressive takeover offer?

They can't afford us seems to have worked for Tenet Healthcare Corp. The chain that owns Hahnemann Hospital repeatedly disparaged, not just the prices rival Community Health Systems quoted in three takeover offers, but also Community's ability to borrow and pay for an acquisition, given its existing debt load and a government review of its Medicaid reimbursement practices.

Late Monday, Community finally gave up on Tenet after its latest rejection.

Pulse Electronics, of Philadelphia, is using a similar line in resisting a would-be buyout by rival Bel Fuse of New Jersey, suggesting its richer but smaller would-be acquirer would have a tough time paying for the deal.

Investors' adviser Institutional Shareholder Services Inc. lent support to Pulse's claim Monday when it questioned the "financing risk" Bel faces if it has to borrow money to pay for the deal.

Gov. Christie has won taxpayer support for trimming state and local spending. But among investors, New Jersey's financial reputation has kept going down.

Moody's cut New Jersey's bond rating to Aa3 last month, after S&P cut it to AA- in February. Both cited the state's high debt load, which looks more like cash-strapped Michigan than neighboring Pennsylvania.

Investor worries are costing taxpayers millions: New Jersey had to pay investors 5.47 percent annual interest for its new $600 million highway bond issue, compared, for example, with a lower-rated Drexel University construction-finance bond that sold for just 5.45 percent, notes Alan Schankel, municipal bond analyst at Janney Capital Markets.

Drexel trustees can't tax or toll, but bond buyers consider them more trustworthy than the New Jersey General Assembly.

Meanwhile, New Jersey is recovering from the recession more slowly than its neighbors because Christie's cuts in state and local government jobs have left more workers unemployed, Schankel notes. The state hopes short-term pain will pay off as debt finally stabilizes.

The little Harrisburg office that reviews requests by citizens for Pennsylvania government records under the state's two-year-old Right to Know law is reeling from a state court decision that could force it to hold hearings every time a state agency or public figure resists making records public.

A three-judge panel headed by Commonwealth Court Judge P. Kevin Brobson ruled last week that the Office of Open Records should have held a hearing to review whether officials need to disclose letters and memos written in connection with directors they appoint to private, nonprofit groups.

Brobson ruled in a dispute in which Jonathan Bari of Philadelphia, who owns Constitutional Walking Tours, has tried to get public officials who control board seats at the nonprofit Independence Visitor Center Corp. to explain why they chose Ride the Ducks to occupy choice office and curbside real estate at the privately run but publicly supported center, leaving guys like Bari with less-desirable locations.

Some organizations that depend on government funds, including Temple University, are included in the open-records law. But if a governor's or mayor's appointment to a nonprofit board were forced to make that board's actions public, it would force disclosure of what goes on at "countless private, not-for-profit corporations," the judges wrote. As if that were bad.

Michael D. Fabius, of the law firm Ballard Spahr, which represented the center, called the ruling "significant."

"It's the first time the court has ordered the Office of Open Records to conduct a hearing," says Terry Mutchler, director of the office. "The Right to Know law was designed so citizens would have quicker and broader access to records of the Commonwealth. This definitely slows down the process."

She's considering an appeal.