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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM T-3
APPLICATION FOR QUALIFICATION OF INDENTURE
UNDER THE TRUST INDENTURE ACT OF 1939
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MAGELLAN HEALTH SERVICES, INC.
(Name of Applicant)
6950 Columbia Gateway Drive
Suite 400
Columbia, Maryland 21046
(Address of Principal Executive Offices)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED:
Title of Class Amount
-------------- ------
9-3/8% Notes due 2008 Aggregate principal amount not to exceed
$300.0 million
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Approximate date of proposed public offering: Except as otherwise
provided for in the proposed Debtor's Third Amended Plan of Reorganization of
Magellan Health Services, Inc., dated August 18, 2003 (the "Plan"),
distributions on account of Allowed Claims will be made on the date on which the
Applicant consummates the Plan (the "Effective Date") or as soon thereafter as
practicable or, with respect to a Disputed Claim, only after and to the extent
such Claim becomes allowed. Capitalized terms used herein and not otherwise
defined have the same meanings as in the Plan or the Indenture (as defined
below), as the case may be.
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Mark Demilio
Executive Vice President and Chief Financial Officer
6950 Columbia Gateway Drive
Suite 400
Columbia, Maryland 21046
(Name and Address of Agent for Service)
With copies to:
Robert L. Messineo, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
The Applicant hereby amends this Application for Qualification on
such date or dates as may be necessary to delay its effectiveness until (i) the
20th day after the filing of an amendment that specifically states that it shall
supersede this Application for Qualification or (ii) such date as the Securities
and Exchange Commission, acting pursuant to Section 307(c) of the Trust
Indenture Act of 1939, may determine upon the written request of the Applicant.
FORM T-3
GENERAL
ITEM 1. GENERAL INFORMATION.
(a) The Applicant is a corporation.
(b) The Applicant was organized under the laws of the State of
Delaware.
ITEM 2. SECURITIES ACT EXEMPTION APPLICABLE.
The Applicant intends to commence a solicitation (the "Solicitation")
of acceptances of the Plan of the Applicant and certain of its subsidiaries as
set forth in the Plan, pursuant to which the Applicant intends to issue 9?%
Notes due 2008 (the "New Notes"). The Chapter 11 cases of the Applicant and 88
of its subsidiaries are presently pending before the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court"). The New
Notes will be issued pursuant to the indenture to be qualified under this Form
T-3 (the "Indenture"). A copy of the Disclosure Statement relating to the Plan
(which includes the Plan as Exhibit A thereto), which was approved by an order
of the Bankruptcy Court dated August 19, 2003, is attached hereto as Exhibit T3E
(the "Disclosure Statement").
Except as otherwise provided for in the Plan, on the Effective Date,
or as soon as practicable thereafter, holders of Senior Note Claims and Other
General Unsecured Claims, on account of such claims, and Houlihan Lokey, on
account of its success fee as set forth in its engagement letter, will receive
New Notes in partial satisfaction of such respective fees and claims or, with
respect to a Disputed Claim, will receive New Notes only after and to the extent
such Claim becomes allowed. The New Notes will have a final maturity of November
15, 2008. The Applicant anticipates initially issuing up to approximately
$275,000,000 of New Notes.
The Applicant believes that the issuance of the New Notes to Class 7
and Class 9 Debtors is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and state securities
and "blue sky" laws pursuant to Section 1145(a)(1) of Title 11 of the United
States Code (the "Bankruptcy Code"). Generally, Section 1145(a)(1) of the
Bankruptcy Code exempts the offer and sale of securities under a bankruptcy plan
of reorganization from registration under the Securities Act and under
equivalent state securities and "blue sky" laws if the following requirements
are satisfied: (1) the securities are issued by the debtor (or an affiliate
participating in a joint plan with the debtor or the debtor's successor) under a
plan of reorganization; (2) the recipients of the securities hold a pre-petition
or administrative claim against the debtor or an interest in the debtor; and (3)
the securities are issued entirely in exchange for the recipient's claim against
or interest in the debtor or are issued "principally" in such exchange and
"partly" for cash or property. The Applicant believes that the offer of the New
Notes under the Solicitation and the exchange of New Notes under the Plan will
satisfy the requirements of Section 1145(a)(1) of the Bankruptcy Code and,
therefore, such offer is exempt from the registration requirements referred to
above.
AFFILIATIONS
ITEM 3. AFFILIATES.
An organizational chart of the Applicant and its subsidiaries is
attached hereto as Exhibit T3G-1 and is incorporated herein in its entirety by
reference. Each subsidiary shown in Exhibit T3G-1 is owned by the Applicant or
its subsidiaries unless otherwise noted.
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MANAGEMENT AND CONTROL
ITEM 4. DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth the names of and all offices held by
all of the current directors and executive officers of the Applicant. The
complete mailing address for each of these directors is c/o Magellan Health
Services, Inc., 6950 Columbia Gateway Drive, Suite 400, Columbia, Maryland
21046.
Name Office
---- ------
Jonthan J. Coslet Director
Andre C. Dimitriadis Director
Henry T. Harbin, M.D. Executive Chairman of the Board and Director
Gerald L. McManis Director
Daniel S. Messina Director
Robert W. Miller Director
James B. Williams Director
Steven J. Shulman Chief Executive Officer
Rene Lerer, M.D. Chief Operating Officer
Jay J. Levin President
Mark S. Demilio Executive Vice President, Chief Financial Officer
Dennis P. Moody Executive Vice President, Aetna Programs
Megan M. Arthur Executive Vice President, General Counsel
ITEM 5. PRINCIPAL OWNERS OF VOTING SECURITIES.
The following chart sets forth each person owning 10 percent or more
of the voting securities of the Applicant:
--------------------------------- ---------------------------- ------------------------ --------------------------
PERCENTAGE
NAME AND COMPLETE MAILING TITLE OF OF VOTING SECURITIES
ADDRESS CLASS OWNED AMOUNT OWNED OWNED
--------------------------------- ---------------------------- ------------------------ --------------------------
TPG Advisors II Common Stock 6,300,053 15.2%
201 Main Street
Suite 2420
Fort Worth, TX 76102
UNDERWRITERS
ITEM 6. UNDERWRITERS.
(a) The following table sets forth the name and address of any person
who acted as an underwriter of any securities of the Applicant which were
outstanding on the date of this Application.
SECURITIES UNDERWRITER AND ADDRESS
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9-3/8% Senior Notes due 2007
JP Morgan
270 Park Avenue
New York, NY 10017
Credit Suisse First Boston
Eleven Madison Avenue
New York, NY 10010
UBS Warburg
299 Park Avenue
New York, NY 10171
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(b) No person is acting as principal underwriter of the securities
proposed to be offered pursuant to the Indenture.
CAPITAL SECURITIES
ITEM 7. CAPITALIZATION.
(a) The following table sets forth certain information with respect
to each authorized class of securities of the Applicant as of the date hereof.
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TITLE OF CLASS AMOUNT AUTHORIZED AMOUNT OUTSTANDING
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Common Stock ($0.25 per share par value) 80,000,000 35,318,926
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Preferred Stock (no par value) 10,000,000 59,063
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(b) Each share of the Applicant's Common Stock entitles the holder
thereof to one vote. Pursuant to the Applicant's Restated Certificate of
Incorporation, as set forth in Exhibit T3A attached hereto, the voting rights of
each share of Applicant's Preferred Stock is as designated by the Applicant's
Board of Directors. Currently the only designation of Preferred Stock
outstanding are the shares of the Applicant's Series A Preferred Stock. Each
share of Series A Preferred Stock entitles the holder thereof to a number of
votes equal to the number of shares of Common Stock into which such shares of
Series A Preferred Stock is convertible. The Common Stock and Series A Preferred
Stock vote together as one class on each matter submitted to a vote at all
meetings of the Applicant's common shareholders.
INDENTURE SECURITIES
ITEM 8. ANALYSIS OF INDENTURE PROVISIONS.
The following is a general description of certain provisions of the
Indenture to be qualified. The description is qualified in its entirety by
reference to the form of Indenture filed as an exhibit hereto. Prior to the
Effective Date of the Plan and the effectiveness of this Application, the
Applicant will file an amendment to this Application for Qualification and an
amended Indenture containing additional and/or modified terms and conditions.
Events of Default; Withholding of Notice.
Each of the following are Events of Default under the Indenture:
(a) default for 30 days in the payment when due of interest on any
Note;
(b) default in the payment when due of the principal of any Note;
(c) failure by the Applicant to comply with certain restrictions on
merger, consolidation or sale of assets under the Indenture;
(d) failure by the Applicant for 30 days after written notice to
comply with any of its other agreements in the Indenture;
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(e) default under any Indebtedness by the Applicant or any of its
Restricted Subsidiaries that results in failure to pay any such Debt at
maturity, or acceleration of the maturity of such Indebtedness, in an aggregate
amount at least equal to $20 million, or, together with any other accelerated
Indebtedness, $35 million;
(f) the Applicant or any of its Restricted Subsidiaries within the
meaning of any Bankruptcy Law (i) commences a voluntary case, (ii) consents to
the entry of an order for relief against it in an involuntary case, (iii)
consents to the appointment of a custodian of it or for all or substantially all
of its property, (iv) makes a general assignment for the benefit of its
creditors, or (v) takes any comparable action under any foreign laws relating to
insolvency;
(g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (i) is for relief against the Applicant or any of its
Restricted Subsidiaries in an involuntary case, (ii) appoints a custodian of the
Applicant or any of its Restricted Subsidiaries or for all or substantially all
of its property, or (iii) orders the winding up or liquidation of the Applicant
or any Restricted Subsidiaries; and
(h) failure by the Applicant or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $20 million which judgments are not
paid, discharged or stayed within 60 days after their entry.
The Applicant shall deliver to the Trustee, within thirty days after
becoming aware of the occurrence thereof, written notice in the form of an
Officers' Certificate of any Default or Event of Default, its status and what
action the Applicant is taking or proposes to take with respect thereto. The
Trustee may withhold from Noteholders notice of any continuing Default or Event
of Default if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of the Noteholders.
Execution and Authentication of the Securities; Application of
Proceeds.
The Notes will be executed on behalf of the Applicant by one or more
Officers of the Applicant. Such signatures may be manual or by facsimile. If an
Officer whose signature is on a Note no longer holds that office at the time a
Note is authenticated, the Note shall nevertheless be valid. A Note will not be
valid until an authorized signatory of the Trustee manually signs the
certificate of authentication on the Note. The signature will be conclusive
evidence that the Note has been authenticated under the Indenture. The Trustee
shall authenticate and make available for delivery Notes as set forth in the
Appendix to the Indenture. The Trustee may appoint an authenticating agent
reasonably acceptable to the Applicant to authenticate the Notes. Any such
appointment shall be evidenced by an instrument signed by a Trust Officer, a
copy of which shall be furnished to the Applicant. Unless otherwise provided in
the appointment, an authenticating agent may authenticate the Notes whenever the
Trustee may do so.
The Notes will be issued to holders of certain claims pursuant to the
Plan. As a result, the Applicant will not realize any proceeds from such
issuance.
Release or Release and Substitution of Property.
No property of the Applicant is subject to the lien of the Indenture,
except that in order to secure the Applicant's compensation to and
indemnification of the Trustee, the Trustee shall have a lien prior to the Notes
on all money or property held or collected by the Trustee other than money or
property held in trust to pay principal of, premium, if any, and interest on
particular Notes.
Discharge of Liability on Securities.
The Indenture will be discharged and will cease to be of further
effect, except as to surviving rights of registration of transfer or exchange of
the Notes, as to all Notes issued thereunder, when:
(1) either (A) all Notes that have been previously authenticated
(except lost, stolen or destroyed Notes that have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
aggregated and held in trust by the Applicant and thereafter repaid to the
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Applicant or discharged from the trust) have been delivered to the Trustee for
cancellation; or (B) all Notes that have not been previously delivered to the
Trustee for cancellation have become due and payable and the Applicant has
irrevocably deposited or caused to be deposited with the Trustee as trust funds
in trust solely for the benefit of the Noteholders, cash in U.S. dollars, U.S.
Government Securities, or a combination thereof, in such amounts as will be
sufficient without consideration of any reinvestment of interest, to pay and
discharge the entire Indebtedness on the Notes not previously delivered to the
Trustee for cancellation for principal, premium, if any, and interest on the
Notes to maturity or such redemption date;
(2) the Applicant has paid or caused to be paid all other sums
payable by it under the Indenture; and
(3) the Applicant delivers to the Trustee an Officers' Certificate
and Opinion of Counsel stating that all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture have been satisfied.
Statement as to Compliance.
The Applicant shall deliver to the Trustee, within 120 days after the
end of each fiscal year, an Officers' Certificate stating that in the course of
the performance by the signers of their duties as Officers of the Applicant they
would normally have knowledge of any Default and whether or not the signers know
of any Default that occurred during such period. If they do, the certificate
shall describe the Default, its status and what action the Applicant is taking
or proposes to take with respect thereto.
The Applicant also shall comply with TIA ss.314(a)(4).
ITEM 9. OTHER OBLIGORS.
Upon issuance pursuant to the Plan, the Applicant's obligations with
respect to the Notes will not be guaranteed; however, the Indenture provides for
future subsidiary guarantors.
Contents of Application for Qualification. This Application for Qualification
comprises--
(a) Pages numbered 1 to 9, consecutively (including an attached
Exhibit Index).
(b) The statement of eligibility and qualification of the trustee
under the indenture to be qualified.
(c) The following exhibits in addition to those filed as a part of
the statement of eligibility and qualification of the trustee:
Exhibit T3A Certificate of Incorporation of
Applicant (incorporated by reference
herein to Exhibit 3(a) to the 1992
Annual Report on Form 10-K filed by
Magellan Health Services, Inc. on
December 15, 1992).
Exhibit T3B Bylaws of Applicant (incorporated by
reference herein to Exhibit 3(b) to the
1999 Annual Report on Form 10-K filed by
Magellan Health Services, Inc. on
September 30, 1999).
Exhibit T3C* Form of Indenture among Applicant and
the Trustee.
Exhibit T3D Not Applicable.
Exhibit T3E Disclosure Statement and accompanying
Third Amended Plan of Reorganization of
Magellan Health Services, Inc., dated
August 18, 2003 as filed with the U.S.
Bankruptcy Court for the Southern
District of New York (incorporated by
reference herein to Exhibits 2(a) and
2(b) to a Quarterly Report on Form 10-Q
filed by Magellan Health Services, Inc.
on August 19, 2003).
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Exhibit T3F Cross reference sheet showing the
location in the Indenture of the
provisions inserted therein pursuant to
Section 310 through 318(a), inclusive,
of the Trust Indenture Act of 1939
(included as part of Exhibit T3C).
Exhibit T3G-1* Organizational chart of Applicant and
its subsidiaries.
Exhibit T3G-2** Statement of eligibility and
qualification of the Trustee on Form
T-1.
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* Filed herewith.
** To be filed by amendment.
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SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Applicant, Magellan Health Services, Inc., a corporation organized under the
laws of the State of Delaware, has duly caused this Application for
Qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City of
Columbia, State of Maryland, on the 28th day of August 2003.
[SEAL] MAGELLAN HEALTH SERVICES, INC.
By: /s/ Mark Demilio
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Name: Mark Demilio
Title: Executive Vice President and
Chief Financial Officer
Attest: /s/ Megan M. Arthur
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Name: Megan M. Arthur
Title: Secretary
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EXHIBIT INDEX
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Exhibit T3A Certificate of Incorporation of
Applicant (incorporated by reference
herein to Exhibit 3(a) to the 1992
Annual Report on Form 10-K filed by
Magellan Health Services, Inc. on
December 15, 1992).
Exhibit T3B Bylaws of Applicant (incorporated by
reference herein to Exhibit 3(b) to the
1999 Annual Report on Form 10-K filed by
Magellan Health Services, Inc. on
September 30, 1999).
Exhibit T3C* Form of Indenture among Applicant and
the Trustee.
Exhibit T3D Not Applicable.
Exhibit T3E Disclosure Statement and accompanying
Third Amended Plan of Reorganization of
Magellan Health Services, Inc., dated
August 18, 2003 as filed with the U.S.
Bankruptcy Court for the Southern
District of New York (incorporated by
reference herein to Exhibits 2(a) and
2(b) to a Quarterly Report on Form 10-Q
filed by Magellan Health Services, Inc.
on August 19, 2003).
Exhibit T3F Cross reference sheet showing the
location in the Indenture of the
provisions inserted therein pursuant to
Section 310 through 318(a), inclusive,
of the Trust Indenture Act of 1939
(included as part of Exhibit T3C).
Exhibit T3G-1* Organizational chart of Applicant and
its subsidiaries.
Exhibit T3G-2** Statement of eligibility and
qualification of the Trustee on Form
T-1.
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* Filed herewith.
** To be filed by amendment.
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