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Maxicare Health Plans, Inc.
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Contact: Thomas C. Franco
Joseph Kist
Broadgate Consultants, Inc.
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FOR IMMEDIATE RELEASE
MAXICARE BOARD QUESTIONS INTENTIONS OF 3.8% DISSIDENT
SHAREHOLDER GROUP
_____________________________________________________
LOS ANGELES, March 29, 1998 - Maxicare Health Plans, Inc.
(NASDAQ/NMS:MAXI) announced today that its Board of Directors
unanimously approved actions to protect the Company's
shareholders from the hostile consent solicitation being waged by
Paul R. Dupee, Jr., a stock speculator who previously had a
consent decree entered against him by the Securities and Exchange
Commission.
Peter J. Ratican, Maxicare's Chairman, President and Chief
Executive Officer said, "The Board is concerned that the
secretive and coercive tactics employed by Dupee and his group
are really intended to further their self-interest under the
pretense of maximizing shareholder value."
Mr. Ratican noted that: 1) Dupee initiated the consent
solicitation and litigation against the Company without ever
consulting with management or the Board; 2) Dupee intends to seek
reimbursement for expenses and compensation in an undisclosed
amount for overseeing any sale or liquidation of the Company;
and, 3) Dupee's participants in the hostile solicitation have
recently engaged in highly speculative trading in the Company's
stock, including the sale of put options.
Mr. Ratican noted, "Dupee has not articulated why or how he
thinks his group can better serve the interests of the Company or
its shareholders merely by taking control and offering the
Company up for sale. The majority of Dupee's nominees to the
Board do not bring any healthcare industry experience to bear.
None of them have operating experience in the seven states where
the Company does business and five of the nominees do not live in
the United States."
Mr. Ratican added, "After Dupee filed his consent solicitation, I
contacted him and arranged a meeting in an attempt to discuss the
situation and to seek to address his concerns about the Company's
direction. I was very disappointed that Dupee would not discuss
in any detail his plans or strategies for the Company."
"Hanging a 'For Sale' sign out the window and hoping for the
best, as Dupee seems to advocate, may serve his immediate
personal interests, but it does not represent a well thought out
strategy to enhance value for all shareholders," continued Mr.
Ratican. "The Board believes that given the short-term decline
in value of numerous HMO stocks, including those with significant
operations in California, and the fire sale mentality that Dupee
is bent on encouraging, it is unlikely that his proposals would
maximize shareholder value."
The Board and Maxicare's management team have been carefully
reviewing various strategic alternatives for the Company and are
fully committed to pursuing initiatives aimed at maximizing
shareholder value. The Company is implementing a focused
business strategy to strengthen its market positions in
California and Indiana, while maintaining a financially
disciplined approach to managing operations.
In order to protect the Company and its shareholders against
misleading and potentially destructive takeover tactics such as
Dupee's, the Board has implemented certain by-law amendments,
which will be in effect for a limited duration. The by-law
amendments are intended to inhibit potential hostile attempts to
seize control of the Board as a prelude to a change of control of
the Company before the Board has an opportunity to carefully
evaluate all options to maximize shareholder value. These
amendments, which are set to expire at the Company's Annual
Meeting in 1999, increase the shareholder vote necessary to
increase the size of the Board or amend this provision and the
provisions of the by-laws with respect to notice of shareholder
nominees from 50% to 80%.
Mr. Ratican said, "The primary purpose of the Board's action is
to provide adequate time to evaluate the Company's strategic
alternatives and to inform all shareholders of these
alternatives, as well as to avoid a hasty and ill-defined
proposal, such as put forward by Dupee, which may adversely
affect shareholder value."
Additionally, the Company intends to take file charges against
Dupee and members of his investor group in Delaware state and
federal courts on March 30, 1998 asserting numerous violations of
federal securities laws, including anti-fraud and disclosure
violations.
Maxicare is a managed health-care company that operates in seven
states, serving members in California, Indiana, Illinois,
Louisiana, North Carolina, South Carolina, and Wisconsin. The
Company's Board of Directors, excluding Mr. Ratican, consists
entirely of outsiders, including: Claude S. Brinegar, Retired
Vice Chairman of Unocal Corporation; Florence F. Courtright,
Private Investor; Thomas W. Field, Jr., President of Field and
Associates, a management consulting firm; Charles E. Lewis, M.D.,
Director of the Center for Health Promotion and Disease
Prevention, University of California at Los Angeles and Alan S.
Manne, Professor Emeritus, Stanford University. The Board
currently beneficially owns approximately 4.4% of the Company's
common stock.
The Company said it will be distributing its consent solicitation
materials shortly and is urging shareholders to review it before
taking any action.