Magellan Health continues to seek amendment providing for waiver of defaults

By Sara Rosenberg

New York, Jan. 16 - Magellan Health Services Inc. is continuing to pursue an amendment to its credit agreement that would provide a waiver of existing defaults.

The company had previously obtained a waiver, however, that waiver expired on Jan. 15 and no extension has been obtained at this point.

The lack of an extension on the waiver was attributed to an additional default caused by the order obtained by the State of Tennessee to seize possession and control of the assets of one of the company's wholly owned subsidiaries, a news release said. The newest default has the effect of immediately accelerating obligations under the credit agreement.

"The timing of the entry of the order did not allow the company sufficient time to seek a modified waiver on a timely basis. The automatic acceleration under the credit agreement also constitutes a default under the bond indentures governing the company's senior and subordinated notes," the release said. "Magellan is working to have vacated or withdrawn the order obtained by the State of Tennessee and is currently in discussions with the State of Tennessee to resolve the matter."

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

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