PacifiCare Cuts Planned Stock Offering by 50% : Health care: The Cypress-based company, which will now sell 3 million shares instead, attributes the decision to poor market conditions.
PacifiCare Health Systems Inc., the big regional HMO operator, said Thursday that it has slashed its planned secondary stock offering by 50% because of poor market conditions.
The company now plans to sell 3 million shares of non-voting Class B common stock instead of the 6 million shares initially proposed. Half of the 3 million shares are being offered by its majority shareholder, UniHealth America, a Burbank-based hospital holding company.
While the new stock--expected to be offered next week--has not yet been priced, PacifiCare’s 1.5 million shares would bring $37.13 million at Thursday’s closing price of $24.75.
Company officials said on June 8 that they hoped to raise as much as $100 million from PacifiCare’s half of the larger offering, an indication that they thought the stock would sell for $33 or more a share.
The Class B stock was first issued June 11 and initially traded for $29.50 a share.
The declining price prompted the decision to cut the size of the second offering, said Wayne Lowell, PacifiCare’s chief financial officer.
“We could have sold more,” he said, “but we are not willing to sell as many shares as initially planned at the price the market is now paying.”
PacifiCare intends to use its proceeds from the offering for various corporate purposes, including payment of bank debt.
In June, the company said it wanted to pay off $50 million in debt incurred in its December, 1991, acquisition of Health Plan of America in Orange.
PacifiCare reported a profit of $25.7 million on revenue of $1.24 billion for its latest fiscal year.
The company, based in Cypress, operates health maintenance organizations in California, Oklahoma, Oregon, Texas and Washington.
Other operations include Columbia General Insurance, a brokerage licensed in 34 states; Secure Horizons, a Medicare supplement program; Pacific Review Services, a medical review and case management company, and LifeLink, a managed care company specializing in treatment of behavioral disorders.
