NU Online News Service, Jan. 28, 11:58 a.m. – PacifiCare Health Systems Inc., Santa Ana, Calif., says its lenders have given it the flexibility it needs to carry out a $60 million restructuring plan.
The lenders will waive a requirement that could have forced PacifiCare to hire a financial consultant, and ignore the restructuring charge when deciding whether the managed care company has met their financial performance goals, PacifiCare says.
Bank of America Corp., Charlotte, N.C., leads a syndicate of lenders that supply PacifiCare with $150 million in revolving credit and a $650 million term loan. The lenders have a right to step in if PacifiCare does poorly.
The proposed restructuring plan should increase profits in the long run, but it will probably force PacifiCare to record a loss for the fourth quarter of 2001, the company says.
PacifiCare could have met the syndicate agreement performance requirements even if the lenders included the restructuring charge, but getting approval from the lenders and a waiver of the financial consultant requirement seemed desirable, PacifiCare says.
PacifiCare had hoped to refinance the syndicate debt by selling notes in mid-2001, but turmoil in world credit markets forced PacifiCare to give up on the note sale. The Bank of America syndicate helped PacifiCare cope by postponing the expiration date for the credit arrangement to Jan. 2, 2003, from Jan. 1, 2002, according to PacifiCare.
Meanwhile, in related news, PacifiCare has hired Michael Henderson to be senior vice president of finance.
Henderson will help with financial analysis, forecasting and budgeting. He will report to Gregory Scott, the chief financial officer, PacifiCare says.
Henderson previously was chief financial officer for a Presbyterian Health Plan of New Mexico, Albuquerque, N.M., a midsize managed care company. He spent 20 years in the health insurance and managed care units at Prudential Financial Inc., Newark, N.J.