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Magellan Health Services Secures Commitment for Refinancing of Senior Secured
Debt
Business Editors
COLUMBIA, Md.--(BUSINESS WIRE)--Aug. 1, 2003--
Deutsche Bank Commits to $230 Million Credit Facility to
Reorganized Magellan
Magellan Health Services, Inc. (OCBB:MGLH) today announced that
it has accepted a letter from Deutsche Bank under which Deutsche Bank
has committed, subject to certain conditions, to provide Magellan with
a credit facility totaling $230 million effective on Magellan's exit
from its Chapter 11 bankruptcy proceedings. The new credit facility
will replace the credit facility contemplated by the Plan of
Reorganization filed by Magellan on March 26, 2003 and will provide
reorganized Magellan with more favorable terms and greater financial
flexibility than it would have had under the previously contemplated
credit facility.
The commitment for the new facility has the support of the
Official Committee of Unsecured Creditors appointed in Magellan's
Chapter 11 case. Magellan stated that it expects to consummate the new
facility upon its emergence from Chapter 11 in September 2003.
"The refinancing of Magellan's senior secured debt through the
Deutsche Bank commitment further enhances the prospective strength and
value of reorganized Magellan," said Steven J. Shulman, CEO of
Magellan Health Services. "In Deutsche Bank, Magellan will have a
strong financial partner that shares the goal of positioning the
company to compete and succeed when it emerges from Chapter 11. We are
pleased with the commitment Deutsche Bank has delivered and look
forward to a mutually rewarding relationship with them."
Mark S. Demilio, chief financial officer of Magellan, stated,
"With this new credit facility and the equity commitment we previously
announced, we expect to exit Chapter 11 with a strong and sustainable
balance sheet and the financial flexibility to continue to enhance
service and product offerings for our members, customers and providers
while investing in Magellan's future as the industry leader. Deutsche
Bank's commitment is further evidence of the confidence that the
financial community has in the strength of our business and the
prospects for our future performance."
The new credit facility will have a maturity of approximately five
years compared to approximately two years under the previously
contemplated credit facility. Interest rates under the new facility
are contemplated to be less than under the previously contemplated
facility. The components of the new facility will be term loans of
$100 million; the ability to borrow additional funds, and/or issue
letters of credit, of up to $50 million under a revolving loan
facility; and the ability to issue letters of credit of up to $80
million under a separate letter of credit facility. Magellan will use
the proceeds from the term loans, as well as cash on hand, to pay in
full the outstanding loans under its current credit facility of
approximately $160 million. Letters of credit currently outstanding
and supported by the current credit facility will be supported by the
new facility.
The complete terms of the commitment letter will be filed with the
U.S. Bankruptcy Court for the Southern District of New York.
The Deutsche Bank commitment is subject to certain conditions as
set forth in the commitment letter, including approval by the
Bankruptcy Court having jurisdiction over Magellan's Chapter 11 case
and certain other conditions customary for commitments of this nature.
The consummation of the new facility with Deutsche Bank and the
effectiveness of Magellan's restructuring are conditioned on
confirmation and consummation of the Plan in accordance with the U.S.
Bankruptcy Code.
Gleacher Partners LLC is serving as financial advisor to Magellan
Health Services, and Weil, Gotshal & Manges LLP is bankruptcy counsel
to Magellan Health Services.
About Magellan: Headquartered in Columbia, Md., Magellan Health
Services (OCBB: MGLH), is the country's leading behavioral managed
care organization, with approximately 65 million covered lives. Its
customers include health plans, corporations and government agencies.
Safe Harbor Statement: Certain of the statements made in this
document including the success of any restructuring constitute forward
looking statements contemplated under the Private Securities
Litigation Reform Act of 1995. These forward looking statements are
subject to known and unknown uncertainties and risks which could cause
actual results to differ materially from those contemplated or implied
by such forward looking statements including: the ability of the
Company to obtain the consent of the Bankruptcy Court for the
transactions referred to above, the ability to obtain the acceptances
from its creditors necessary to consummate the proposed restructuring,
the Company's obtaining Bankruptcy Court approval of a disclosure
statement related to the Plan of Reorganization and any other needed
approvals, and confirmation and consummation of the Proposed Plan of
Reorganization, service issues arising with certain customers,
terminations by customers, operating results or cash flows differing
from those contemplated or implied by such forward looking statements,
the impact of new or amended laws or regulations, governmental
inquiries, outcome of ongoing litigation, interest rate increases,
unanticipated increases in the costs of care and other factors. Any
forward looking statements made in this document are also qualified in
their entirety by these risks and the complete discussion of risks set
forth under the caption "Cautionary Statements" in Magellan's Annual
Report on Form 10-K/A for the year ended September 30, 2002 filed with
the Securities and Exchange Commission on January 23, 2003.
--30--DM/ph*
CONTACT: Magellan Health Services, Inc.
Investor Contacts:
Melissa Rose, 410-953-1218
or
Gleacher Partners LLC
Bill Forrest, 212-418-4200
or
Magellan Health Services, Inc.
Media Contact:
Erin Somers, 410-953-2405
KEYWORD: MARYLAND
INDUSTRY KEYWORD: PHARMACEUTICAL INSURANCE MEDICAL
SOURCE: Magellan Health Services, Inc.
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Aug-01-2003 17:29 GMT
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