PacifiCare Health Systems OKs New Class of Non-Voting Common Stock

Shareholders of PacifiCare Health Systems Inc. approved a new class of non-voting common stock Thursday that will be used in a public offering to raise up to $100 million.

The previously announced offering is aimed at helping the health maintenance organization pay off $30 million in debt from a recent acquisition and to expand in Northern California and other areas.

The Cypress-based company, which recently bought Health Plan of America, is expected to file the offering with the Securities and Exchange Commission within a week, said Wayne B. Lowell, the HMO’s chief financial officer.

“The industry is consolidating,” Lowell said. “We just want to have sufficient firing power to withstand the competition.”

In a specially called meeting, shareholders approved plans to classify existing shares of common stock as Class A and to create a new Class B common stock consisting of non-voting shares. Current shareholders will receive a share of Class B stock for every share of Class A stock they own, essentially a two-for-one stock dividend.

An undetermined amount of non-voting stock then will be offered to the public, Lowell said.

The arrangement won’t affect the balance of power at the company. PacifiCare’s majority shareholder, UniHealth America of Burbank, will continue to hold 54% of the company’s stock, Lowell said. Separately, UniHealth plans to raise a some cash for itself by selling a chunk of its own PacifiCare Class B shares.

All other Class A shareholders will also maintain their relative stakes in PacifiCare, Lowell said.

The HMO is taking advantage of its continued ability to post strong earnings and keep operating costs down. In its fiscal 1992 second quarter, ended March 31, the company’s profits climbed 45% to $10.2 million. Revenue jumped 41% to $424.6 million.