Blue Cross Aims to Raise $414 Million in Stock Sale

Blue Cross of California hopes to raise up to $414 million through a previously announced public stock offering in which it plans to sell a 20% stake in a newly formed managed-care subsidiary.

In a filing with the Securities and Exchange Commission, Blue Cross said it plans to offer 17.3 million shares in the subsidiary--temporarily named AHN Inc.--which would operate Blue Cross’ CaliforniaCare health maintenance organization and the Woodland Hills-based company’s other managed-care operations.

Blue Cross estimated the stock’s maximum offering price of $24 a share. The offering’s lead underwriters included Merrill Lynch & Co.

Blue Cross, the state’s largest health insurer, had said in late August that it planned to create the unit and sell 20% of its ownership to the public. Blue Cross itself will remain nonprofit and retain both the remaining equity and voting control of the new company. The plan hinges on approval by the California Department of Corporations.

The proposed offering follows a sharp improvement in Blue Cross’ performance, which suffered in the 1980s. In the nine months that ended Sept. 30, the company earned $200.9 million, up 64% from a year earlier, on premium revenue of $6.9 billion.