Exhibit 99.1
MAGELLAN
HEALTH SERVICES
6950 Columbia Gateway Drive
Columbia, MD 21046
www.magellanhealth.com
FOR IMMEDIATE RELEASE
- ---------------------
INVESTOR CONTACT: Melissa Rose
877-645-6464
MEDIA CONTACT: Erin Somers
410-953-2405
MAGELLAN HEALTH SERVICES CLARIFIES AND CORRECTS CERTAIN INFORMATION
REGARDING ITS FINANCIAL RESTRUCTURING
-- COMPANY REITERATES IMPACT OF INCREASED SHARES AND
RESULTING PRICES PER SHARE--
-- WARRANT EXERCISE PRICE IS CORRECTED --
COLUMBIA, Md. - January 7, 2004 - Magellan Health Services, Inc. (Nasdaq:MGLN)
today clarified and corrected certain information regarding the transactions
resulting from its emergence from Chapter 11 bankruptcy as previously disclosed
on January 5, 2004.
The Company reiterated the change in the number of shares of common stock that
were issued under its plan of reorganization and the effect such increase had on
certain per share prices. As previously disclosed, the Company was authorized in
connection with implementing the plan to increase the number of shares to be
issued pursuant to the plan to all parties proportionally. The Company increased
the number of shares by 2.3 times the number stated in its plan, with the same
effect as if the Company had effected a 2.3 stock split. All share amounts and
per share prices were accordingly adjusted proportionally. The effect of the
stock split on some of the key components of the plan of reorganization was as
follows:
Post-Split
(as issued)
-----------
Equity Value per Share as Set
Forth in the Disclosure Statement.............................$9.39 to $11.57
Shares issued to Subordinated Note Holders............................20,518,830
(including 858,967 shares that elected Cash-Out Option)
Price Paid by Onex for Shares Purchased
Pursuant to Investment Commitment......................................$12.39
Price Paid by Onex for Shares Purchased
to Fund Cash-Out Election..............................................$ 9.78
Price Paid by Creditors and Onex to Purchase
Shares in Equity Offering..............................................$12.39
Total Shares Purchased by Onex.........................................8,415,580
Total Shares Issued and Outstanding...................................35,356,537
(including approximately 0.5 million shares being
held pending the resolution of certain disputed claims
in the bankruptcy)
- more -
MAGELLAN HEALTH SERVICES CLARIFIES AND CORRECTS CERTAIN INFORMATION REGARDING
ITS FINANCIAL RESTRUCTURING
- - PAGE 2 -
The Company also announced today that it had entered into documents clarifying
the terms of the warrants to purchase shares of its Ordinary Common Stock that
it issued to the former holders of the common stock and the Series A Redeemable
Preferred Stock of Magellan in connection with the consummation of the Chapter
11 in order to reflect correctly the stock split. The exercise price of the
warrants was corrected so as to equal $30.46 (rather than $30.20 as previously
announced), as required to give proper effect to the stock split.
Pursuant to a Warrant Agreement entered into on January 5, 2004, warrants to
purchase a total of 570,826 shares of Magellan's Ordinary Common Stock were
issued to the former holders of common stock and Series A Redeemable Preferred
Stock of Magellan as provided by the plan of reorganization. The Warrants are
exercisable until January 5, 2011. The plan calls for such warrants to be issued
at an exercise price determined by a formula which varies with the number of
shares issued to other parties in accordance with the plan. The stock split made
in connection with the implementation of the plan affected the exercise price of
the warrants. A clerical error was made in the calculation of the exercise price
applicable to the warrants after giving effect to this adjustment and the
exercise price included in the Warrant Agreement and announced to be applicable
to the warrants in the Company's January 5 press release and Form 8-K Current
Report was incorrectly stated to be $30.20. The exercise price required by the
plan, giving correct effect to the adjustment, was $30.46. In order to conform
to this requirement and as permitted by the Warrant Agreement, Magellan has
entered into corrective documents providing that the exercise price of the
warrants is $30.46. No other terms of the Warrants were changed.
About Magellan: Headquartered in Columbia, Md., Magellan Health Services
(Nasdaq:MGLN) is the country's leading behavioral managed care organization. Its
customers include health plans, corporations and government agencies.
Safe Harbor Statement: Certain of the statements made in this document may
constitute forward-looking statements contemplated under the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on
management's current expectations and 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:
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, increased
competition, economic uncertainties and other factors. Any forward-looking
statements made in this document are qualified in their entirety by the complete
discussion of risks set forth under the caption "Cautionary Statements" in
Magellan's Transition Report on Form 10-K for the transition period from October
1, 2002 to December 31, 2002 filed with the Securities and Exchange Commission
on August 12, 2003.
# # #