0001104659-06-012035.txt : 20060227 0001104659-06-012035.hdr.sgml : 20060227 20060227084359 ACCESSION NUMBER: 0001104659-06-012035 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20060227 DATE AS OF CHANGE: 20060227 GROUP MEMBERS: HIGHLAND CRUSADER OFFSHORE PARTNERS, L.P. GROUP MEMBERS: JAMES DONDERO GROUP MEMBERS: STRAND ADVISORS, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN HOMEPATIENT INC CENTRAL INDEX KEY: 0000879181 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 621474680 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-42184 FILM NUMBER: 06645003 BUSINESS ADDRESS: STREET 1: 5200 MARYLAND WAY STREET 2: MARYLAND FARMS OFFICE PARK CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 6152218884 MAIL ADDRESS: STREET 1: MARYLAND FARMS OFFICE PARK STREET 2: 5200 MARYLAND WAY CITY: BRENTWOOD STATE: TN ZIP: 37027 FORMER COMPANY: FORMER CONFORMED NAME: DIVERSICARE INC /DE DATE OF NAME CHANGE: 19930328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HIGHLAND CAPITAL MANAGEMENT LP CENTRAL INDEX KEY: 0001167365 IRS NUMBER: 752716725 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 13455 NOEL ROAD STE 1300 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 9726284100 MAIL ADDRESS: STREET 1: 13455 NOEL ROAD STE 1300 CITY: DALLAS STATE: TX ZIP: 75240 SC 13D 1 a06-5814_1sc13d.htm BENEFICIAL OWNERSHIP OF 5% OR MORE

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. )*

AMERICAN HOMEPATIENT, INC.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

026649103

(CUSIP Number)

Michael S. Minces

Highland Capital Management, L.P.

Two Galleria Tower

13455 Noel Road, Suite 800

Dallas, Texas 75240

(972) 628-4100

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

COPY TO:

Stephen Fraidin

Kirkland & Ellis LLP

153 East 53rd Street

New York, New York 10022

(212) 446-4800

February 27, 2006

(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. ý

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.

^* 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).

CUSIP No. 026649103						13D	Page 2 of 11 Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Highland Crusader Offshore Partners, L.P., a Bermuda partnership

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			ý
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Bermuda

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 1,719,994

			8.	Shared Voting Power 0

			9.	Sole Dispositive Power 1,719,994

			10.	Shared Dispositive Power 0

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,719,994

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.9%

	14.	Type of Reporting Person (See Instructions) PN

CUSIP No. 026649103						13D	Page 3 of 11 Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Highland Capital Management, L.P., a Delaware limited partnership 75-2716725

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			ý
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF/WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 1,719,994

			8.	Shared Voting Power 0

			9.	Sole Dispositive Power 1,719,994

			10.	Shared Dispositive Power 0

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,719,994

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.9%

	14.	Type of Reporting Person (See Instructions) IA/PN

CUSIP No. 026649103						13D	Page 4 of 11 Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Strand Advisors, Inc., a Delaware corporation 95-4440863

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			ý
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 1,719,994

			8.	Shared Voting Power 0

			9.	Sole Dispositive Power 1,719,994

			10.	Shared Dispositive Power 0

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,719,994

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.9%

	14.	Type of Reporting Person (See Instructions) CO

CUSIP No. 026649103						13D	Page 5 of 11 Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) James Dondero

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			ý
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF/PF

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization United States of America

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 1,719,994

			8.	Shared Voting Power 0

			9.	Sole Dispositive Power 1,719,994

			10.	Shared Dispositive Power 0

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,719,994

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.9%

	14.	Type of Reporting Person (See Instructions) IN

CUSIP No. 026649103		13D	Page 6 of 11 Pages

Item 1.	Security and Issuer
The class of equity security to which this statement relates is the Common Stock, par value $0.01 per share (the “Common Stock”), of American HomePatient, Inc., a Delaware corporation (referred to herein as the “Issuer”). The name and address of the principal executive offices of the Issuer are 5200 Maryland Way, Suite 400, Brentwood, TN 37027.

Item 2.	Identity and Background
This report on Schedule 13D (this “Report”) is being filed jointly by each of the following persons pursuant to Rule 13d-1(k) promulgated by the Securities and Exchange Commission (the “Commission”) pursuant to Section 13 of the Securities Exchange Act of 1934 as amended (the “Exchange Act”) (collectively, the “Reporting Persons”): (1) Highland Crusader Offshore Partners, L.P., a Bermuda partnership (“Crusader Offshore”), (2) Highland Capital Management, L.P., a Delaware limited partnership (“Highland Capital”), (3) Strand Advisors, Inc., a Delaware corporation (“Strand”), and (4) James Dondero, an individual. The address of each of the Reporting Persons is: c/o Highland Capital Management, L.P., Two Galleria Tower, 13455 Noel Road, Suite 800, Dallas, Texas 75240. Pursuant to the requirements of Schedule 13D, information is also being provided with respect to Highland Crusader Offshore Fund GP, L.P., a Delaware limited partnership (“Crusader LP”) and Highland Crusader Offshore Fund GP, LLC, a Delaware limited liability company (“Crusader LLC”).The address of each of Crusader LP and Crusader LLC is: c/o Highland Capital Management, L.P., Two Galleria Tower, 13455 Noel Road, Suite 800, Dallas, Texas 75240. Crusader Offshore is principally engaged in purchasing, holding and selling securities for investment purposes. Crusader LP is principally engaged in the business of serving as general partner of Crusader Offshore. Crusader LLC is principally engaged in the business of serving as general partner of Crusader LP. Highland Capital is principally engaged in the business of serving as investment adviser to certain entities, including Crusader Offshore. Pursuant to the management agreement between Highland Capital and Crusader Offshore, Highland Capital exercises all voting and dispositive powers with respect to securities held by Crusader Offshore. Strand is principally engaged in the business of serving as general partner of Highland Capital. The principal business of James Dondero is serving as the President and a director of Strand and other affiliates of Highland Capital. None of the Reporting Persons, Crusader LP or Crusader LLC, nor any of their respective officers or managing directors, have been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) during the past five years. None of the Reporting Persons, Crusader LP or Crusader LLC, nor any of their respective officers or managing directors, have been party to a civil proceeding of a judicial or administrative body of competent jurisdiction during the past five years which has resulted in subjection to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Crusader LP, Crusader LLC, Highland Capital and Strand are organized under the laws of the State of Delaware. Crusader Offshore is organized under the laws of Bermuda. Mr. Dondero is a citizen of the United States.
Item 3.	Source and Amount of Funds or Other Consideration
The 1,719,994 shares of Common Stock reported herein by the Reporting Persons were acquired by Crusader Offshore, with funds from working capital in the ordinary course of business, at a total

CUSIP No. 026649103		13D	Page 7 of 11 Pages

aggregate purchase price of approximately $5,356,433. No funds were borrowed by the Reporting Persons, Crusader LP or Crusader LLC in order to complete the purchases of the Common Stock.
The information set forth in Item 4 of this Schedule 13D is hereby incorporated herein by reference.

Item 4.	Purpose of Transaction
The Reporting Persons acquired the Common Stock for investment in the ordinary course of business. The Reporting Persons have become increasingly disappointed with the Issuer’s performance and have become increasingly concerned that the Issuer’s over-leveraged balance sheet, recent additional impediments to management’s ability to successfully navigate the challenging Medicare reimbursement environment, and the near term maturity of the Issuer’s secured debt would make it difficult for the Issuer to increase its liquidity or materially reduce the Issuer’s outstanding total debt to improve the Issuer’s prospects. On February 27, 2006, the Reporting Persons decided to send a letter to the Issuer (the “Letter”) proposing to acquire all of the outstanding Common Stock at a purchase price of $3.40 per share. A copy of the Letter is set forth hereto as Exhibit 99.2 and incorporated herein by reference. If the Board of Directors of the Issuer does not agree to negotiate a merger transaction, the Reporting Persons intend to review the desirability of taking various steps that could help it achieve its objective of acquiring the entire equity interests in the Issuer, including, without limitation, purchasing or offering to purchase additional shares of Common Stock and seeking representation on the Board of Directors of the Issuer. Except as set forth herein or such as would occur upon completion of any of the actions discussed above, none of the Reporting Persons has any present plan or proposal that would relate or result in any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D. The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including, without limitation, the Issuer’s financial position and strategic direction, price levels of the Common Stock, conditions in the securities market, general economic and industry conditions, the likelihood and desirability of acquiring the entire equity interest of the Issuer, and actions taken by the Issuer’s board of directors, the Reporting Persons may, in the future, take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, purchasing additional shares of Common Stock or selling some or all of their Common Stock, alone or with others, pursuing discussions with the Issuer, other stockholders and third parties with regard to their investment in the Issuer, and/or otherwise changing their intentions with respect to any and all matters referred to in Item 4 of Schedule 13D. The information set forth in Item 3 of this Schedule 13D is hereby incorporated herein by reference.

Item 5.	Interest in Securities of the Issuer
Pursuant to Rule 13d-4 of the Exchange Act, the Reporting Persons, Crusader LP and Crusader LLC declare that filing this statement shall not be construed as an admission that any such person is, for the purposes of Section 13(d) and/or Section 13(g) of the Exchange Act, the beneficial owner of any securities covered by this statement. Percentages in section (a) below calculate, as of the date of this Report, the direct beneficial ownership for Crusader Offshore based upon 17,388,389 shares of Common Stock outstanding as of October 26, 2005, as represented by the Issuer in its Form 10-Q filed with the Commission on November 2, 2005.

CUSIP No. 026649103		13D	Page 8 of 11 Pages

	(a) (i) Crusader Offshore directly beneficially owns 1,719,994 shares of Common Stock, collectively representing 9.9% of the outstanding Common Stock of the Issuer.
	(ii) Crusader LP is the general partner of Crusader Offshore. However, pursuant to the management agreement between Highland Capital and Crusader Offshore, Highland Capital exercises all voting and dispositive powers with respect to securities held by Crusader Offshore and Crusader LP beneficially owns 0 shares of Common Stock of the Issuer.
	(iii) Crusader LLC is the general partner of Crusader LP. However, pursuant to the management agreement between Highland Capital and Crusader Offshore, Highland Capital exercises all voting and dispositive powers with respect to securities held by Crusader Offshore and Crusader LLC beneficially owns 0 shares of Common Stock of the Issuer.
	(iv) Highland Capital is the investment advisor to Crusader Offshore and has the power to control and vote the shares set forth in paragraph (a)(i) above and accordingly may be deemed to indirectly beneficially own all of such shares.
	(v) Strand is the general partner of Highland Capital, and accordingly may be deemed to indirectly beneficially own all of the shares set forth in paragraph (a)(i) above.
	(vi) James Dondero is the President and a director of Strand, and accordingly, may be deemed to indirectly beneficially own all of the shares set forth in paragraph (a)(i) above.
	(b) As a result of the relationships described herein, each of the Reporting Persons may be deemed to be a beneficial owner of the Common Stock, and as a result each of the Reporting Persons may be deemed to have sole voting and dispositive power over the shares owned by Crusader Offshore.
	(c) No transactions in the Issuer’s Common Stock were executed by any of the Reporting Persons, Crusader LP or Crusader LLC in the 60 days prior to the date of this Report.
	(d) Except as stated within this Item 5, to the knowledge of the Reporting Persons, only the Reporting Persons have the right to receive or the power to direct the receipt of dividends from, or proceeds from the sale of, the shares of Common Stock of the Issuer reported by this statement.
	(e) Inapplicable.

Item 6.	Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
Except for the agreements described above or in response to Items 2 and 4 of this Schedule 13D, which are hereby incorporated herein by reference, to the best knowledge of the Reporting Persons, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the persons enumerated in Item 2 of this Schedule 13D, and any other person, with respect to any securities of the Issuer, including, but not limited to, buying, selling, transferring or voting of any of the securities, finder’s fees, joint ventures, loan or option agreements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies.

CUSIP No. 026649103		13D	Page 9 of 11 Pages

Item 7.	Material to Be Filed as Exhibits
Exhibit 99.1 - Schedule 13D Joint Filing Agreement, dated February 27, 2006 by and among Crusader Offshore, Highland Capital, Strand and James Dondero. Exhibit 99.2 - Letter to the Board of Directors of the Issuer, dated February 27, 2006 from Highland Capital.

CUSIP No. 026649103

13D

Page 10 of 11 Pages

SIGNATURES

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

Date: February 27, 2006

	JAMES DONDERO

		/s/ James Dondero
	Name: James Dondero


	STRAND ADVISORS, INC.


	By:	/s/ James Dondero
	Name: James Dondero
	Its: President


	HIGHLAND CAPITAL MANAGEMENT, L.P.


	By: Strand Advisors, Inc.
	Its: General Partner


	By:	/s/ James Dondero
	Name: James Dondero
	Its: President


	HIGHLAND CRUSADER OFFSHORE PARTNERS, L.P.


	By: Highland Crusader Fund GP, L.P.
	Its: General Partner

	By: Highland Crusader Fund GP, LLC
	Its: General Partner

	By: Highland Capital Management, L.P.
	Its: Sole Member

	By: Strand Advisors, Inc.
	Its: General Partner

CUSIP No. 026649103

13D

Page 11 of 11 Pages

	By:	/s/ James Dondero
	Name: James Dondero
	Its: President

EX-99.1 2 a06-5814_1ex99d1.htm EXHIBIT 99

EXHIBIT 99.1

SCHEDULE 13D JOINT FILING AGREEMENT

In accordance with the requirements of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, and subject to the limitations set forth therein, the parties set forth below agree to jointly file a Statement on Schedule 13D (including amendments thereto) with regard to the common stock of American HomePatient, Inc., a Delaware corporation, and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filings. In evidence thereof, the undersigned, being duly authorized, hereby execute this Joint Filing Agreement as of the date set forth below.

Date: February 27, 2006

	JAMES DONDERO

		/s/ James Dondero
	Name: James Dondero


	STRAND ADVISORS, INC.


	By:	/s/ James Dondero
	Name: James Dondero
	Its: President


	HIGHLAND CAPITAL MANAGEMENT, L.P.


	By: Strand Advisors, Inc.
	Its: General Partner


	By:	/s/ James Dondero
	Name: James Dondero
	Its: President


	HIGHLAND CRUSADER OFFSHORE PARTNERS, L.P.


	By: Highland Crusader Fund GP, L.P.
	Its: General Partner

	By: Highland Crusader Fund GP, LLC
	Its: General Partner

	By: Highland Capital Management, L.P.
	Its: Sole Member

	By: Strand Advisors, Inc.
	Its: General Partner


	By:	/s/ James Dondero
	Name: James Dondero
	Its: President

EX-99.2 3 a06-5814_1ex99d2.htm EXHIBIT 99

Exhibit 99.2

February 27, 2006

Joseph F. Furlong, III

President and Chief Executive Officer

American HomePatient, Inc.

5200 Maryland Way

Brentwood, Tennessee 37027

Henry T. Blackstock

W. Wayne Woody

Donald R. Millard

William C. O’Neil

c/o American HomePatient, Inc.

5200 Maryland Way

Brentwood, Tennessee 37027

Dear Members of the Board of Directors:

Highland Capital Management, L.P., a Delaware limited partnership (“Highland”) is currently the beneficial owner of 9.9 % of the outstanding shares of common stock of American HomePatient, Inc., a Delaware corporation (“AHP”) and $204 million of secured debt of AHP. Highland hereby proposes to acquire all of the outstanding equity interests of AHP for a cash purchase price of $3.40 per share. This value represents a premium of approximately 11% over the closing price for AHP common stock on February 24, 2006. We believe that our proposal provides an outstanding opportunity for your stockholders to maximize the value of their investment in AHP.

We are available to immediately commence discussions with you and your advisors on the terms of our proposal and to negotiate a merger agreement providing for the transaction described above. It is our preference to work cooperatively to negotiate a mutually agreeable transaction that will benefit all of AHP’s constituencies, including its shareholders, employees, customers, creditors and management. However, we are determined to complete the acquisition of AHP. If you are unwilling to cooperate with Highland to complete a transaction, we will take all appropriate steps to accomplish a transaction, including seeking representation on your Board of Directors at AHP’s annual meeting of the shareholders.

Our proposal is subject to the receipt of any required regulatory approvals; we do not anticipate any delay in or difficulties with obtaining such approvals. We have available funds sufficient to finance the full purchase price in cash. Accordingly, our transaction would not be subject to a financing condition.

Our proposal provides a compelling opportunity for AHP shareholders to realize full value and immediate liquidity for their shares at an attractive premium over the current stock price. This is particularly true in light of AHP’s over-leveraged balance sheet, recent additional impediments to management’s ability to successfully navigate the challenging Medicare reimbursement environment, and the near term maturity of AHP’s secured debt. As you are aware, AHP’s outstanding $250 million Secured Promissory Note (“Note”) will mature and be payable on August 1, 2009. It is our view that AHP’s revenue generating capacity will suffer materially as a result of the new Medicare reimbursement policies and that AHP will not have sufficient cash

reserves to repay the amounts owed under the Note. We do not believe that AHP’s management has substantially improved AHP’s liquidity situation or materially reduced the amount of AHP’s total debt since AHP emerged from bankruptcy in 2003, and we do not expect that AHP’s prospects will improve under the direction of current management such that repayment of the Note will be possible. Additionally, we find it unlikely that AHP will be able to refinance the Note since the leverage ratio of AHP significantly exceeds the leverage ratio of its similarly situated public competitors. If AHP is unable to simplify its capital structure prior to AHP’s looming debt maturity, AHP may have no other option than to file for bankruptcy a subsequent time.

If the Note matures and payment in full is not made, Highland reserves the right to exercise all remedies available to it as a holder of secured debt. If the Note is accelerated, the shareholders would lose all or substantially all of their equity investment unless AHP’s business prospects dramatically change in the near future. We believe the shareholders will stand to lose even more value if the holders of the Note ultimately prevail in their case to increase the interest rate on the Note from 6.785% to 12% retroactively since the date AHP emerged from bankruptcy.

Since Highland holds 82% of the principal amount of the Note, Highland is in a unique position to complete the acquisition of AHP and simplify AHP’s capital structure to provide liquidity to AHP and enhance its ability to secure future financing. We believe our proposal affords the shareholders the best chance to exit their investment while receiving a premium over the current price of the common stock of AHP instead of suffering a loss on their investment.

Highland is a registered investment adviser specializing in credit and alternative investment investing. Highland currently manages over $20 billion in assets for investors around the world. We are serious about acquiring AHP and are able and willing to devote all the resources necessary to reach an agreement and complete a transaction as soon as possible. To this end we have engaged Kirkland & Ellis LLP as our legal counsel to assist us in this transaction. We expect that we could sign definitive documents and announce a transaction within 45 days from the date our advisors begin their work. Highland intends to proceed with a transaction and hopes that the members of the Board of Directors will consider our proposal favorably.

In short, we encourage the members of the Board of Directors to permit us to move forward with the proposed transaction, and, to that end, we are available to promptly meet with you and your advisors to discuss the terms of our proposal and to negotiate a definitive agreement. We are confident that your shareholders will support our proposal and urge you to listen to their views and consider what is in the best interest of the shareholders. We believe this proposal provides a compelling opportunity for your shareholders to realize immediate liquidity for their shares at an attractive premium over the current stock price.

We look forward to your response to this letter by no later than 5 PM, EDT on Friday, March 3, 2006.

Sincerely,

/s/ Patrick H. Daugherty

Patrick H. Daugherty

Head of Special Situations Investing

Highland Capital Management, L.P.

Under the Securities Exchange Act of 1934 (Amendment No. )*

Under the Securities Exchange Act of 1934
(Amendment No. )*