NU Online News Service, July 1, 2003, 4:58 p.m. EDT – Onex Corp., Toronto, has agreed to increase its proposed investment in Magellan Health Services Inc., Columbia, Md., to $285 million, from an original maximum of $200 million, Magellan says.
Magellan, a company that runs mental health and drug treatment programs for one-quarter of all U.S. residents, filed for protection from creditors in March under Chapter 11 of the U.S. Bankruptcy Code.
Onex announced in May that it would supply between $100 million and $200 million to help Magellan pay off $1 billion in old debts. In exchange, Onex would get 50% of Magellan’s common stock voting rights.
Onex came up with a better offer after “competing interest concerning an equity investment commitment” surfaced, Magellan says.
The financing agreement and Magellan’s reorganization plan are subject to the approval of the U.S. Bankruptcy Court in New York. Magellan hopes to emerge from Chapter 11 proceedings in September.