Magellan to obtain $230 million exit financing facility from Deutsche Bank

By Carlise Newman

Chicago, Aug. 4 - Magellan Health Services Inc. said Deutsche Bank will provide it with a $230 million credit facility as exit financing for its emergence from Chapter 11. The new credit facility will replace the credit facility included in the reorganization plan filed on March 26.

The facility consists of $100 million of term loans; the ability to borrow additional funds, and/or issue letters of credit of up to $50 million under a revolving loan facility; and the ability to issue letters of credit of up to $80 million under a separate letter of credit facility.

Magellan will use the proceeds from the term loans, as well as cash on hand, to pay the $160 million in outstanding loans under its current credit facility. Letters of credit outstanding and supported by the current credit facility will be supported by the new facility.

The new credit facility will have a maturity of five years, compared to two years under the prior facility. Interest rates under the new facility will be less than under the prior facility.

The commitment for the new facility has the support of Magellan's unsecured creditors. Magellan stated that it expects to complete the new facility upon its emergence from Chapter 11 in September 2003.

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