PacifiCare Expanding Buyback to $1 Billion

PacifiCare Health Systems Inc. (PHSY), one of the biggest health insurers in California, said it’s now able to spend as much as $1 billion to buy back its ailing shares, up from $500 million.

The Santa Ana-based company said it received an amendment to its line of credit, allowing it to boost the dollar amount of its buyback program. PacifiCare said it expects to pay for share repurchases with cash from operations, bank debt or other debt financing.

PacifiCare said it bought back 8.8 million shares last year for about $480 million. About 6.3 million of those shares were bought since Nov. 7 under its current 12-million-share authorization, which extends through early 2001. The company had about 37.3 million shares outstanding at the end of last month.

Shares of PacifiCare rose $1.44 to $50.38 on Nasdaq, but the stock remains down 37% over the last year.

The company is the biggest operator of health maintenance organizations serving people on Medicare, the U.S. government health program for the elderly.

In June, it said shareholders had approved combining its two classes of stock, clearing the way for PacifiCare to buy back 13% of its shares. PacifiCare said it planned to buy back 5.9 million shares from UniHealth Foundation, its largest stockholder, in seven transactions starting Aug. 9.