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EXHIBIT 17(b)(1)
[LETTERHEAD OF NATWEST MARKETS]
November 12, 1996
Board of Directors
Health Management, Inc.
0000-X Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Gentlemen:
We refer to the Agreement and Plan of Merger among Transworld Home
HealthCare, Inc. ("Transworld"), IMH Acquisition Corp. ("Newco") and Health
Management, Inc., dated as of November 13, 1996 (the "Merger Agreement"),
providing, among other matters, for the merger of Newco with and into the
Company and a cash payment of $2.00 per share (the "Merger Consideration") to be
made to the Company's stockholders (other than Transworld or Newco) (the
"Stockholders"). You have requested our opinion as to the fairness, from a
financial point of view, to the Stockholders, of the Merger Consideration. The
terms and conditions of the Merger are as set forth in the Merger Agreement.
In arriving at our opinion expressed herein, we examined and reviewed,
among other matters, (1) the Merger Agreement, (2) the Company's current
financial condition, (3) certain historical financial and operating information
with respect to the Company, (4) certain internal business plans and financial
and operating forecasts with respect to the Company, (5) certain publicly
available information concerning other companies engaged in businesses similar
to the business of the Company, and we compared the Company, from a financial
point of view, with such companies, (6) the terms, to the extent publicly
available, of certain transactions, and (7) the market price data and trading
activities for the Company's common stock. We met and had discussions with
management representatives of the Company concerning the Company's financial
condition, business, operations and prospects, and we conducted such other
analyses and examinations as we deemed relevant to form a basis for our opinion
expressed herein.
In conducting our review and analysis and in arriving at our opinion
herein, we took into account such accepted financial and investment banking
procedures and considerations as we deemed relevant, including, among others,
(i) a review of the trading history of the Company's common stock, (ii) a
review of the historical and current financial condition and operating
characteristics of the Company, as compared with other companies we deemed
comparable to the Company, (iii) a review of equity market valuation parameters
for the securities of companies we
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deemed comparable to the Company, and (iv) a review of the financial terms of
certain transactions we considered relevant for comparison with the financial
terms of the Merger.
We were not engaged to verify independently the accuracy or
completeness of any information furnished by the Company or any publicly
available information which we reviewed in arriving at our opinion herein, and
we assumed and relied, with your approval, upon the accuracy and completeness
of all such information without independent verification. With respect to the
financial forecasts provided to us, we assumed, with your approval, that such
forecasts were reasonably prepared on bases reflecting the best current
estimates and good faith judgments of the Company's management as to future
financial performance.
We were not engaged to conduct a physical inspection of any properties
or make an independent valuation or appraisal of any assets or liabilities,
contingent or otherwise, of the Company and we were not furnished with any such
valuations or appraisals. We were not engaged to review any legal, accounting
or tax aspects of the Merger.
Our opinion herein is based on our assessment of economic, monetary,
market and regulatory conditions as they exist and can be evaluated on the date
of this letter and such other factors as we deemed relevant. We were not
requested to conduct any review or analysis of the Company after the date of
this letter and we do not intend to do so. This letter does not address the
Company's underlying decision to proceed with the Merger or any related
transaction.
Our opinion herein is provided at the request and for the information
of the Board of Directors in evaluating the Merger Consideration, and does not
constitute a recommendation to the Stockholders or any other persons concerning
whether or not to vote in favor of the Merger or to take or refrain from taking
any other action in connection with the Merger. NatWest Markets has not acted
as an agent or fiduciary of the Stockholders or any other persons and this
letter does not confer any rights or remedies upon the Stockholders or any
other persons.
National Westminster Bank Plc, New York Branch ("NatWest Markets") and
its affiliates, as part of their investment banking services, are regularly
engaged in the valuation of businesses and securities in connection with
mergers, acquisitions, sales and distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
NatWest Markets has performed investment banking and financial advisory services
for the Company from time to time. In the ordinary course of business,
affiliates of NatWest Markets actively trade the securities of the Company for
their own account and the accounts of their customers and, accordingly, may at
any time hold a long or short position in such securities. NatWest Markets may
provide investment banking and financial advisory services to Transworld or
Newco in the future.
The Company has agreed to pay NatWest Markets upon delivery of this
letter a fee (the "Fairness Opinion Fee") in the amount of $500,000. NatWest
Markets is also entitled to receive a success
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fee for its financial advisory services in connection with the Merger and
certain related transactions (the "M&A Transaction Fee"). The amount of the
Fairness Opinion Fee is to be credited against the M&A Transaction Fee
otherwise payable to NatWest Markets.
This letter may not be quoted or referred to in any filing, report,
document, release or other communication, whether written or oral, made,
prepared, issued or transmitted by the Company, Transworld or Newco, without
the prior written approval of NatWest Markets, which shall not be unreasonably
withheld; provided, however, this letter may be reproduced in full in the
Company's proxy statement relating to the Merger, and if reproduced in full in
such proxy statement, otherwise quoted from or referred to therein.
On the basis of and subject to the matters set forth herein, we are of
the opinion that, as of the date hereof, the Merger Consideration is fair, from
a financial point of view, to the Stockholders.
Very truly yours,
/s/ National Westminster Bank Plc
New York Branch
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