PacifiCare Awaits OK on Stock Offering to Pay Debt, Start ‘War Chest’ for Takeovers

PacifiCare Health Systems Inc. said Monday that its board has approved a stock offering to raise up to $100 million on Wall Street to pay off debt and to finance a “war chest” for future takeovers.

Another $100 million would be raised by the health maintenance organization’s majority share holder, UniHealth America of Burbank, if the Securities and Exchange Commission approves the stock offer, company officials said.

That approval may come by the end of the month, said David K. Erickson, investor relations manager for PacifiCare.

PacifiCare’s decision to offer 3 million shares of common stock on the over-the-counter market was made a month after the company announced that it was considering such a cash-raising plan.

At the time, chief executive Terry Hartshorn said the company needed to raise at least $50 million to pay off debt incurred during the December, 1991, acquisition of Orange-based Health Plan of America. That company’s 1991 revenues were $160 million.

PacifiCare earned $25.7 million on revenue of $1.24 billion in the 12 months ended Sept. 30, 1991.

The rest of the money earned in the offering, expected to take place immediately after SEC approval, would go for general corporate expenses and for “increased working capital,” meaning that the company is embarking on a strategy to have a ready fund available for future acquisitions.

In a related development, the board of directors last week approved creation of a Class B, non-voting common stock, which was distributed to stockholders in the form of a 2-for-1 stock split.

The Class B shares will begin trading publicly on Thursday, Erickson said.

The 3 million shares that the company wants to offer later this summer would also be Class B shares. Another 3 million shares will be offered for sale by UniHealth America, which owns 54% of PacifiCare stock, Erickson said.

UniHealth America spokesman Ross Goldberg said the stock offering will not change the ownership position of his company, which owns 12 hospitals, including Martin Luther Hospital in Anaheim and La Palma Intercommunity Hospital. Goldberg said proceeds earned by UniHealth America would go toward funding a variety of corporate projects in the next few years.

The managing underwriters for the offering are PaineWebber Inc.; Dillon, Read & Co. Inc. and Dean Witter Reynolds Inc.