-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PTqdEDmDupn6fr8qzpmuqps4DrZaqmcrGY9ZvfbodZKh404w7LyTa57HyyxYZbOP mZpsOjxtLAkGv4boFPePXg== 0000902664-06-002624.txt : 20061117 0000902664-06-002624.hdr.sgml : 20061117 20061117124810 ACCESSION NUMBER: 0000902664-06-002624 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20061117 DATE AS OF CHANGE: 20061117 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TRIAD HOSPITALS INC CENTRAL INDEX KEY: 0001074771 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062] IRS NUMBER: 752816101 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-56393 FILM NUMBER: 061225752 BUSINESS ADDRESS: STREET 1: 5800 TENNYSON PARKWAY CITY: PLANO STATE: TX ZIP: 75024 BUSINESS PHONE: 9727892732 MAIL ADDRESS: STREET 1: 5800 TENNYSON PARKWAY CITY: PLANO STATE: TX ZIP: 75024 FORMER COMPANY: FORMER CONFORMED NAME: TRIAD HOSPITALS LLC DATE OF NAME CHANGE: 19981207 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TPG-Axon Capital Management, LP CENTRAL INDEX KEY: 0001328562 IRS NUMBER: 201967305 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 888 SEVENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: (212) 479-2000 MAIL ADDRESS: STREET 1: 888 SEVENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D/A 1 sc13da.txt TRIAD HOSPITALS, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- SCHEDULE 13D/A UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)* TRIAD HOSPITALS, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) 89579K109 ------------------------- (CUSIP Number) Mary A. Lee TPG-Axon Capital Management, L.P. 888 Seventh Avenue, 38th Floor New York, New York 10019 (212) 479-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) NOVEMBER 16, 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 ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.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). (Continued on following pages) (Page 1 of 18 Pages) - ------------------- -------------- ------------------ CUSIP NO. 89579K109 SCHEDULE 13D/A Page 2 of 17 Pages - ------------------- -------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) TPG-Axon GP, LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |X| (B) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e). N/A - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER 5,475,200 ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 5,475,200 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,475,200 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.2%* - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- * All percentage ownership reported in this Schedule 13D/A is based on 88,020,293 shares of Common Stock issued and outstanding as of October 31, 2006, as reported by the Issuer (as defined below) in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006 filed with the Securities and Exchange Commission on November 7, 2006. - ------------------- -------------- ------------------ CUSIP NO. 89579K109 SCHEDULE 13D/A Page 3 of 17 Pages - ------------------- -------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) TPG-Axon Partners GP, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |X| (B) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e). N/A - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER 1,882,011 ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 1,882,011 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,882,011 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1%* - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- - ------------------- -------------- ------------------ CUSIP NO. 89579K109 SCHEDULE 13D/A Page 4 of 17 Pages - ------------------- -------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) TPG-Axon Partners, LP - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |X| (B) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e). N/A - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER 1,882,011 ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 1,882,011 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,882,011 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1%* - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- - ------------------- -------------- ------------------ CUSIP NO. 89579K109 SCHEDULE 13D/A Page 5 of 17 Pages - ------------------- -------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) TPG-Axon Capital Management, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |X| (B) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e). N/A - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER 5,475,200 ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ----------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 5,475,200 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,475,200 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.2%* - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- - ------------------- -------------- ------------------ CUSIP NO. 89579K109 SCHEDULE 13D/A Page 6 of 17 Pages - ------------------- -------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) TPG-Axon Partners (Offshore), Ltd. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |X| (B) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e). N/A - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands, BWI - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER 3,593,189 ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 3,593,189 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,593,189 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.1%* - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- - ------------------- -------------- ------------------ CUSIP NO. 89579K109 SCHEDULE 13D/A Page 7 of 17 Pages - ------------------- -------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Dinakar Singh LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |X| (B) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e). N/A - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER 5,475,200 ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 5,475,200 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,475,200 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.2%* - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- - ------------------- -------------- ------------------ CUSIP NO. 89579K109 SCHEDULE 13D/A Page 8 of 17 Pages - ------------------- -------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Dinakar Singh - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |X| (B) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e). N/A - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER 5,475,200 ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 5,475,200 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,475,200 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.2%* - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- - ------------------- -------------- ------------------ CUSIP NO. 89579K109 SCHEDULE 13D/A Page 9 of 17 Pages - ------------------- -------------- ------------------ Pursuant to Rule 13d-2 promulgated under the Act, this Schedule 13D/A (this "Amendment No. 1") amends the Schedule 13D filed on November 1, 2006 (File Number 005-56393) ("Schedule 13D"). This Amendment No. 1 is being filed by TPG-Axon GP, LLC ("GPLLC"), TPG-Axon Partners GP, L.P. ("PartnersGP"), TPG-Axon Partners, LP ("TPG-Axon Domestic"), TPG-Axon Capital Management, L.P. ("TPG-Axon Management"), TPG-Axon Partners (Offshore), Ltd. ("TPG-Axon Offshore"), Dinakar Singh LLC ("Singh LLC") and Dinakar Singh ("Mr. Singh"). The foregoing persons are sometimes collectively referred to herein as the "Reporting Persons." Any disclosures herein with respect to persons other than the Reporting Persons are made on information and belief of the Reporting Persons. This Amendment No. 1 relates to the Common Stock, par value $0.01 per share (the "Common Stock"), of Triad Hospitals, Inc., a Delaware corporation (the "Issuer"). References herein to the "Shares" are to the shares of Common Stock of the Issuer being reported herein by the Reporting Persons. The Reporting Persons are making a single, joint filing because they may be deemed to constitute a "group" within the meaning of Section 13(d)(3) of the Act. The agreement among the Reporting Persons to file jointly (the "Joint Filing Agreement") is attached hereto as Exhibit 1. TPG-Axon Management, as investment manager to TPG-Axon Domestic and TPG-Axon Offshore, has the power to direct the disposition and voting of the Shares held by TPG-Axon Domestic and TPG-Axon Offshore. PartnersGP is the general partner of TPG-Axon Domestic. GPLLC is the general partner of PartnersGP and TPG-Axon Management. Singh LLC is a Managing Member of GPLLC. Mr. Singh, an individual, is the Managing Member of Singh LLC and in such capacity may be deemed to control Singh LLC, GPLLC and TPG-Axon Management, and therefore may be deemed the beneficial owner of the securities held by TPG-Axon Domestic and TPG-Axon Offshore. Mr. Singh and Eric Mandelblatt ("Mr. Mandelblatt") are Co-Chief Executive Officers of TPG-Axon Management. Each of Singh LLC, GPLLC, PartnersGP, Mr. Singh and Mr. Mandelblatt disclaims beneficial ownership of all of the shares of Common Stock reported in this Amendment No. 1. ITEM 4. PURPOSE OF TRANSACTION Item 4 of the Schedule 13D is hereby amended to include the following: On November 16, 2006, certain of the Reporting Persons sent a letter to the Issuer setting forth a number of the Reporting Persons' concerns regarding the Issuer's strategy, performance and management controls, and recommending strategies to address the performance issues. A copy of the letter is attached hereto as Exhibit 2 and incorporated by reference herein. - ------------------- -------------- ------------------- CUSIP NO. 89579K109 SCHEDULE 13D/A Page 10 of 17 Pages - ------------------- -------------- ------------------- ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Item 7 of the Schedule 13D is hereby amended and restated as follows: Exhibit 1 -- Joint Filing Agreement, dated October 31, 2006, signed by each of the Reporting Persons (previously filed on November 1, 2006 and incorporated by reference herein). Exhibit 2 -- Letter to the Issuer, dated November 16, 2006. - ------------------- -------------- ------------------- CUSIP NO. 89579K109 SCHEDULE 13D/A Page 11 of 17 Pages - ------------------- -------------- ------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 16, 2006 TPG-Axon GP, LLC By: /s/ DINAKAR SINGH ------------------------------------ Dinakar Singh Co-President TPG-Axon Partners GP, L.P. By: TPG-Axon GP, LLC, general partner By: /s/ DINAKAR SINGH ------------------------------------ Dinakar Singh Co-President TPG-Axon Partners, LP By: TPG-Axon Partners GP, L.P., general partner By: TPG-Axon GP, LLC, general partner By: /s/ DINAKAR SINGH ------------------------------------ Dinakar Singh Co-President TPG-Axon Capital Management, L.P. By: TPG-Axon GP, LLC, general partner By: /s/ DINAKAR SINGH ------------------------------------ Dinakar Singh Co-President - ------------------- -------------- ------------------- CUSIP NO. 89579K109 SCHEDULE 13D/A Page 12 of 17 Pages - ------------------- -------------- ------------------- TPG-Axon Partners (Offshore), Ltd. By: /s/ DINAKAR SINGH ------------------------------------ Dinakar Singh Director Dinakar Singh LLC By: /s/ DINAKAR SINGH ------------------------------------ Dinakar Singh Managing Member /s/ DINAKAR SINGH ------------------------------------ Dinakar Singh - ------------------- -------------- ------------------- CUSIP NO. 89579K109 SCHEDULE 13D/A Page 13 of 17 Pages - ------------------- -------------- ------------------- LIST OF EXHIBITS TO SCHEDULE 13D/A 1. Joint Filing Agreement, dated October 31, 2006, signed by each of the Reporting Persons (previously filed on November 1, 2006 and incorporated by reference herein). 2. Letter to the Issuer, dated November 16, 2006. EX-99 2 exhibit_2.txt LETTER TO TRIAD TPG-AXON CAPITAL Dinakar Singh TPG-Axon Capital 888 Seventh Avenue 38/F New York, NY 10023 Mr. James D. Shelton Chairman & CEO Triad Hospitals Inc. 5800 Tennyson Parkway Plano TX 75024 November 16, 2006 Dear Mr. Shelton, As you know, we recently filed a 13-D with the SEC, and in the filing expressed concern regarding the company's strategy and performance. We look forward to continuing our discussions with the company, but in advance of that, we thought it would be useful to further outline our thoughts. Clearly, the hospital industry has been facing a number of broader challenges, many of which are outside the control of individual companies or hospitals. Rising bad debt is the most significant current challenge, but anemic admission volumes and increased pressure on costs have also been meaningful factors in recent years. Valuations for the overall industry have declined in response to concerns about the environment. Despite challenges, many of which are cyclical in nature, the hospital business is still one in which well-run companies can generate solid investment returns and significant cash flow. In fact, we believe that the current environment provides a compelling opportunity for long term investors who are willing to look through the near term noise. Therefore, our concerns are not regarding broad factors which the company cannot control. We are focused on the company's strategy and execution, which RELATIVE to industry peers has delivered sub-par returns. We believe Triad's hospital assets are high quality, and generally well-positioned. As such, the company should trade at favorable valuations to industry comparables. HOWEVER, INSTEAD, TRIAD HAS REGULARLY TRADED AT A SIGNIFICANT DISCOUNT TO INDUSTRY PEERS, AND CURRENTLY TRADES AT THE LOWEST VALUATION IN THE INDUSTRY. Why? In stark contrast to its peers, Triad has achieved poor return on investment and diluted its shareholders. Unfortunately for shareholders, capital spending and management compensation have been high relative to the industry, but growth (per share) and returns have been low. We believe that it is time to put an end to this dilutive strategy, and that the Directors and management must finally begin to show discipline, and focus on creating value for shareholders. At the outset, we would note some surprise at management comments in the past two quarterly conference calls, describing (implicitly and explicitly) shareholders as a burden because of their "short term thinking". We would stress that this is not an issue of short-term vs. long-term, or profits vs. care. Rather, we believe this debate is about the importance of accountability and returns. The company's actions and comments leave it very unclear whether the management and Directors of the company are truly focused on shareholder value, as opposed to maximizing growth. Ultimately, shareholders are not a pesky burden, but the owners of the company, for whom management works, and to whom Directors owe their fiduciary duty. STRATEGY Three factors, in particular, are critical to optimal strategy for a hospital company. First, hospitals are ultimately an extremely local business, in which the characteristics of individual hospitals and markets are far more important than large/broad company factors. Second, hospitals are remarkably capital intensive businesses, and can be `money pits' if prudent capital discipline is not applied. Increasing admissions and quality of care is easy if cost/return is no object. Third, because of their local nature, hospital companies gain little synergy through expansion outside of existing local markets. Therefore, any acquisitions or expansions outside of existing communities must be viewed as pure investments and meet extremely high hurdles. Local market share is a critical factor in determining pricing power. Relative quality of services, and relationships in a region, are critical in driving admissions and market share. As such, unlike many other industries, there are few real advantages of a large pan-regional or national hospital chain company. In reality, other than modest benefits in purchasing power, the primary value a corporate management can provide are strong analytical tools, chain-wide best practices in management, and (most importantly) rigorous capital discipline. Even within a specific market, growth must be analyzed very carefully. While more market share increases bargaining power with managed care companies, one has to very carefully assess the cost of that increased market share against the expected returns. If all things are equal, high local market share is better than low local market share. However this does not justify unlimited spending. Instead, a company must carefully assess potential returns, and solve for optimal levels of market share relative to the required investment. In the hospital business, one can spend virtually unlimited amounts on capital expenditures. Better facilities and enhanced technology & services are all factors that can help improve revenue, and drive admissions. However, the critical issue is whether these expenditures improve returns sufficiently to justify the cost. A non-profit hospital spends as much as they can in order to improve care; the only real question for a non-profit is how they spend the money. A for-profit hospital, by its very nature, must act differently. It must assess whether to spend money, not just ask how. Prior to any meaningful capital expenditure, whether a facility enhancement, or an acquisition, a for-profit company must rigorously analyze the potential return on that investment, and assess whether the risk and cost is justified. In addition, there must be careful ongoing monitoring of those investments, to ensure that they are achieving return objectives. The best run hospital companies are painstaking and deliberate in assessing, analyzing, and monitoring return on investment for even small capital expenditures. Lastly, expansions (whether through acquisitions, joint ventures, or new facility construction) into new markets should receive particular scrutiny. In and of themselves, they do not add any value to the company's existing hospitals and operations. Therefore, they must be viewed, purely and simply, as new investments. These investments must generate a clear and demonstrable excess return for shareholders, in order to be worth the use of precious capital and company resources. In addition, this return must be rigorously compared to the most obvious alternative - returning capital to shareholders (whether via a dividend or stock buyback). Investment in new markets and hospitals must show dramatic benefit relative to the return of the company's existing business. In recent conference calls, management has referred to share buybacks as "gimmicks" and "financial engineering". We would certainly agree that buybacks are not a magical tool, to be used in all circumstances. However, we would stress that a buyback is a reinvestment in your own business, which presumably carries less risk and better value than paying premiums for new businesses. It makes no sense to buy someone else's hospitals at a premium, when you can buy your own at a discount. Either strategy has the POTENTIAL to create growth for shareholders - however the buyback has lower risk and greater certainty, while the new investment is much higher risk. RETURN ON INVESTMENT Ultimately, the acid test for company strategy is the returns generated for shareholders. In this regard, Triad has performed poorly. For comparison purposes, we would use the four other publicly traded general hospital companies - - HCA, Community Health Systems, LifePoint Hospitals, and Health Management Associates. In addition, we have used the 2002 through 2006 period as the most sensible assessment period, since that is the period following the merger with Quorum (and also in which capital expenditures have aggressively increased). FINALLY, WE DO NOT BELIEVE IT IS SENSIBLE TO FOCUS ON GROSS MEASURES OF GROWTH, AS THESE DO NOT CAPTURE REALITY FOR SHAREHOLDERS - IF A COMPANY GROWS BUT DILUTES SHAREHOLDERS IN THE PROCESS, VALUE MAY NOT HAVE BEEN CREATED. For a shareholder, the ONLY measure of growth that is relevant is per share growth. In the 2002 - 2006 time periods, compared to your peers, Triad has delivered lower returns than the peer group, often by substantial amounts. o EBITDA PER SHARE: Triad has had the lowest growth in EBITDA per share, with just 3.8% growth over this period, compared to 7.7% to 20% for the peer group. o EARNINGS PER SHARE: Triad is second to last in the peer group in EPS growth over this period. EPS growth has been 8.8%, comparable only to HMA (7.2%). However the other three hospital companies have been far higher, with EPS growth ranging from 15% to 24% THEREFORE, WHEN ONE ACCOUNTS FOR SHAREHOLDER DILUTION, TRIAD GROWTH OVER THE PAST FOUR YEARS HAS BEEN THE LOWEST IN THE INDUSTRY. We do not believe that the asset base is structurally flawed, and of course management has had ample opportunity to optimize the assets since the spin-off from HCA. However, Triad's strategy has contrasted sharply with that of its peers in two very significant ways. o Triad has been the most aggressive company in the industry in capital expenditure spending, and new facility development o Triad has diluted its shareholders through offerings and mergers, while other companies have balanced growth with capital return, and therefore generally shrunk their share count. Other companies have been more balanced in their investment, and have generally bought assets where strategically needed (as opposed to building new facilities). Triad is the one of the only companies in the industry that has NEVER returned capital to shareholders, and has aggressively spent on capital expenditures and new construction. The end result is clear and unfortunate for shareholders - return on investment has been poor, and overall returns have been depressed. In addition, when adjustments are made for the cost of uninsured and charity care, EBITDA margins for Triad are below average for the industry. Therefore, not only has the heavy capital expenditure program failed to deliver growth without dilution, it has also failed to improve efficiency of existing hospitals. We would be remiss if we did not note that, despite returns that have trailed the industry, management compensation (particularly highlighted in the amount of options expense relative to earnings) is one metric that is near the top of the peer group. MANAGEMENT CONTROLS We have been frustrated and disappointed by the lack of disclosure from the company regarding return on investment and the analytical tools used to assess capital spending. Given the turnover in the company's finance team, and the complex hodge-podge of systems, we are concerned that the company simply does not have the analytical tools in place to properly analyze complex investments and monitor them properly. Rigorous analysis must be done to assess the merit of any capital expenditure. In particular, prior to embarking on expensive and large facilities development, the company must have painstakingly analyzed the risks and reward of this investment. It is not sufficient that a project provide an eventual return that is adequate. The company must assess whether the time and risk involved in the project is appropriate, compared to the return achieved through share buybacks, more modest and incremental capital expenditure, or acquisitions (instead of construction). Building new hospitals is generally considered to be the riskiest type of investment, and certainly has the most deferred return - without careful scrutiny, these investments can result in tremendous leakage of value. It is not surprising that Triad has been the most aggressive of the hospital companies in large scale facility expansion and construction, and is also the company with the poorest returns and growth in that period. The recent announcements regarding bad debt are symptomatic of the company's challenges. Bad debt is an industry issue, and no company has a crystal ball with which to predict future trends. However, Triad has been particularly challenged in assessing and analyzing the problem, and has repeatedly had to make retroactive adjustments based on improper previous calculations. With more focus on integrated systems, and greater financial depth, Triad would have better ability to understand and analyze business trends, collection rates, receivables, etc. It is critical for a hospital company to have a precise understanding of its financials - without this, it cannot properly monitor and assess capital expenditures and maximize efficiency of operations. Overall, this is not just a systems problem. We do not believe the management team or the Board of Directors has sufficient depth of financial expertise for a company of Triad's complexity. In particular, the Board is heavily composed of accomplished academics and community leaders. We do not doubt their quality as individuals; however we are concerned about their apparent lack of qualification to be careful stewards of our capital. A Board of Directors is not an advisory or consulting group - first and foremost, its function is to ensure that shareholder interests are being served, and its members must EACH have the full capability of rigorously assessing company strategy and returns. RECOMMENDATIONS In recent years, shareholders have not had the benefit of a single dollar of share price appreciation, dividend, or capital return. Free cash flow has been negative, drained by heavy capital expenditures. Despite those capital expenditures, growth has been the lowest in the industry, and operating margins are sub-par. We believe it is high time for the company to focus intensely on creating and growing shareholder value. In order to accomplish this, we believe the company should consider the following steps: o Significantly amending the composition of the board, in order to improve the depth of financial sophistication, and also to include representation from shareholders. The current board is simply not credible as a guardian of our capital. o The company should focus on improving and optimizing existing assets. It is critical that focus be placed on improving the company's analytical tools and controls. Margins must be improved, capital expenditures must be rationalized, and issues like bad debt must be analyzed carefully. Ultimately, until the current assets have been optimized and management control has been enhanced, it does not appear sensible to continually expand, and increase complexity. o Capital usage strategy should be dramatically altered. Instead of aggressive spending on capital expenditures and acquisitions, the company should reduce expenditures to levels needed to optimize existing assets. Excess cash flow should be returned to shareholders, via dividends or share buyback. o The company has the flexibility to increase leverage significantly without impairing operating flexibility, or increasing risk to imprudent levels. Rather than keeping this capacity as a `war chest', the company should instead use it to optimize the capital structure, and generate return for shareholders. With these steps, the company could comfortably implement a capital reduction of $1.0 to $1.25 billion, and still have leverage ratios and coverage metrics that would be prudent and manageable. We believe the combination of these efforts can help improve the efficiency of the company's operations and assets, improve the valuation of the company's shares (from industry trailing levels), and will ultimately significantly enhance shareholder value. If capital efficiency is increased, margins are improved, and valuation increases to levels comparable to peers, Triad stock would be significantly higher. Poor capital discipline has led to dilution and low growth - this in turn has resulted in a valuation lower than any of the hospital peer group. We believe the fair value of the stock is 25 to 50% higher than current levels, and that the company should commit itself to realizing this return for shareholders. Finally, we would stress that we do not mean to be disrespectful to you, your management team, or the Board of Directors. We understand that all parties are well-intentioned, and we further recognize that the industry has been facing significant headwinds. We are not generally considered `activist' investors, and we do not repeatedly harangue management teams with unfair and aggressive demands. We believe we have a reputation as a high-quality long-term investor, and our focus is on investing in situations with significant long term potential (not just short term break-up value). However, ultimately we are shareholders, and it is our responsibility to ensure that the value of our investment is maximized in a sensible and appropriate manner. Sincerely, /s/ Dinakar Singh Dinakar Singh Managing Partner TPG - Axon Capital c.c.: Board of Directors -----END PRIVACY-ENHANCED MESSAGE-----