EXHIBIT 99(A)
FOR IMMEDIATE RELEASE
MAGELLAN INVESTOR KEVIN
CONTACT: HELMINTOLLER
(404) 814-5742
MAGELLAN MEDIA CONTACT: ROBERT MEAD
(212) 445-8208
CBHS CONTACT: JOEL WEIDEN
(212) 445-8244
MAGELLAN HEALTH SERVICES ANNOUNCES AGREEMENTS TO
SELL CHARTER ADVANTAGE LLC AND ITS INTEREST IN
CHARTER BEHAVIORAL HEALTH SYSTEMS LLC
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ATLANTA, GA., MARCH 4, 1998--Magellan Health Services, Inc. (NYSE:MGL) announced
today that it had signed definitive agreements to sell Charter Advantage LLC,
which encompasses Magellan's franchise operations, and certain other assets to
Charter Behavioral Health Systems LLC (CBHS) and its 50% interest in CBHS to
Crescent Operating Inc. (NASDAQ: COPI) or its affiliate. The definitive
agreements contemplate the sale of the Company's interest in six-hospital based
joint ventures as well.
Under the terms of the agreement, Magellan will receive $310 million in
total consideration before transaction costs to include $280 million in cash
from CBHS for Charter Advantage LLC, the six hospital-based joint ventures and
certain other assets and $30 million in COPI stock for the 50% interest in CBHS.
The agreements contain a $5 million break-up fee payable half in cash and half
in COPI stock that will go into effect no earlier than 30 days after signing of
the agreements. The transaction is expected to close in the third fiscal quarter
of 1998.
The franchise arrangement between Magellan and CBHS will be terminated upon
closing of the transaction. All of the intellectual property of provider
operations will be transferred to CBHS and it is anticipated that Magellan and
CBHS will enhance their existing preferred provider relationship.
Magellan will use the net proceeds of the transaction to reduce debt
outstanding under its new bank credit agreement.
The closure of the transaction is subject to completion of CBHS's financing,
Magellan's Board of Directors' approval, a 30 day COPI review period, certain
regulatory filings including Hart Scott Rodino, and other customary closing
conditions.
"Over the last year, Magellan has moved significantly forward in its
transformation from being a provider of behavioral healthcare to becoming the
nation's leading manager of specialty care. This transaction will represent the
last major step in that transformation. While the transaction will be modestly
dilutive to earnings per share to Magellan in fiscal 1998, eliminating our
ownership stake in CBHS at this time makes sense as we continue to focus our
energy on integrating the specialty managed care
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units we have acquired into Magellan," said Mac Crawford, chairman, president
and chief executive officer of Magellan. "The transaction should also improve
CBHS's ability to implement their own strategic initiatives. Magellan and CBHS
will continue to have a strong relationship as the leaders in their respective
industries."
John Goff, chairman of the board of CBHS said, "We are pleased to reach an
agreement for the purchase of the remaining provider assets and feel that we
will have an excellent opportunity to expand CBHS's market reach and deliver
quality behavioral healthcare across the nation."
"The elimination of the franchise fees greatly enhances our flexibility for
acquisitions and product expansion. We can now focus our full attention on
strengthening our continuum of care and expanding our provider network," said
Steve Davis, president and chief executive officer of Charter Behavioral Health
Systems. "We are working hard to help ensure that CBHS is well-positioned to
continue to meet the needs of the evolving behavioral healthcare environment. As
the largest private provider of behavioral treatment programs in the country, we
are looking forward to a long-term relationship with the largest private
behavioral healthcare payor, Magellan Health Services."
Magellan Health Services, Inc. is one of the country's largest specialty
care managers. The Company manages the behavioral care of over 58 million lives
with an additional 3.4 million members covered under managed medical specialty
care contracts.
Charter Behavioral Health Systems, LLC is the nation's leading provider of
behavioral and addiction treatment programs. The company's 88 domestic
facilities provide a full continuum of care, including inpatient, outpatient and
partial hospitalization programs.
Certain of the statements in this press release including, without
limitation, statements by Magellan and CBHS regarding the ability to implement
initiatives and the operational relationship between Magellan and CBHS
constitute forward-looking statements under the Private Securities Litigation
Reform Act of 1995. Risk factors such as the level of success in Magellan's
integration of its acquired companies and operational success of the acquired
companies could have a material adverse effect on Magellan's operations. Risk
factors such as the ability of CBHS to complete its financing, Magellan's board
approval, favorable completion of the 30 day review by COPI, Magellan's receipt
of necessary regulatory approvals for the transaction, and completion of
customary closing conditions could prevent Magellan, CBHS and Crescent Operating
Inc. from completing the transaction. For a more complete discussion of these
and other risk factors, please see "Cautionary Statements--The Company" and
"Cautionary Statements--CBHS" in Magellan's Annual Report on Form 10-K for the
fiscal year ended September 30, 1997 filed with the Securities and Exchange
Commission on December 23, 1997.
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