Magellan Health aims to reduce debt; appoints Gleacher as advisor

By Sara Rosenberg

New York, Sept. 30 - Magellan Health Services Inc. is seeking alternatives to reduce its overall debt, including a possible capital restructuring. Towards this end, the company has hired Gleacher Partners, LLC to advise.

As previously reported, Magellan believes it will not be in compliance with some financial covenants in its credit agreement for the quarter and fiscal year ending Sept. 30, 2002. As the company proceeds with its debt reduction plan, it intends to seek covenant waivers from lenders. If these waivers are not obtained, the company said it would not have the adequate liquidity needed to repay the outstanding debt and its ability to obtain the liquidity needed for operations is uncertain.

"The company's cash flow from operations continues to be positive and the Company remains current on all payments to its providers, vendors, suppliers and lenders. Moreover, we believe we have the financial resources to remain current on all operating obligations and to continue investing in our business while we work to reduce our debt, absent an acceleration of our debt maturities," said Mark S. Demilio, chief financial officer, in a news release.

Magellan is a Columbia, Md. behavioral managed care organization.

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