May 13, 2009 / 4:32 PM / 10 years ago

UPDATE 1-Chemed spars with hedge fund over board nominees

NEW YORK, May 13 (Reuters) - Hospice-care provider Chemed Corp (CHE.N), which also offers plumbing services under the Roto-Rooter brand, is urging shareholders to reject a hedge fund’s proposal to nominate five dissident directors to Chemed’s board.

Chemed has asked shareholders to discard proxy cards sent by MMI Investments LP, a New York hedge fund, and instead vote for the board’s nominees.

“MMI has one, and only one, idea for your company: to separate immediately Chemed’s businesses - VITAS and Roto-Rooter,” Chemed said in a letter on Wednesday.

“We believe that this idea is extremely short-sighted and threatens the value of your investment.”

The letter was signed by Chemed Chief Executive Kevin McNamara and Chairman George Walsh.

It added that a separation of the Roto-Rooter and VITAS businesses is not in shareholders’ interest during the global economic downturn, but that management would consider a break-up “when market and economic conditions are right.”

Chemed’s annual meeting of shareholders is scheduled for May 29 in Cincinnati.

Last month, MMI said its five nominees to Chemed’s 11-member board would maximize shareholder value, and argued the company nominees it opposes have financial or family ties to the company and limited operational experience.

“Chemed’s board is in desperate need of significant change,” the letter concluded.

MMI said it owns 3.5 percent of Chemed’s shares outstanding, which traded at $40.55 at mid-day on the New York Stock Exchange, down 29 cents. (Editing by Steve Orlofsky)

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