PacifiCare Shares Rise After Debt Extension
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PacifiCare Health Systems Inc. shares soared 22% after the biggest operator of Medicare health plans said it won a two-year extension on $735 million in debt.
Shares rose $4.65 to $26.01 in heavy trading. The shares have more than doubled since closing at $11.06 on Sept. 21.
PacifiCare said its lenders agreed to extend the debt until January 2005, giving the company more time to battle rising medical costs and a lawsuit by the Texas attorney general concerning unpaid claims. The agreement requires PacifiCare to cut $250 million from its debt by Jan. 2, the firm said after U.S. markets closed.
PacifiCare, based in Santa Ana, also said it wrote down $897 million in assets in the first quarter to comply with stricter accounting rules.
The action will add about $56 million to earnings in 2002, the company said.
The stock was upgraded to “market outperform” from “market perform” by Goldman Sachs & Co. analyst Charles Boorady.
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