Health Risk Management Announces Planned Financing and Changes in Management and Board of Directors

Apr 03, 2001, 01:00 ET from Health Risk Management, Inc.

    MINNEAPOLIS, April 3 /PRNewswire/ --
 Health Risk Management, Inc. (HRM) (Nasdaq:   HRMI) announced a number of
 developments related to external financing as well as changes affecting the
 HRM Board of Directors and management.
     HRM announced the signing of a multi-faceted letter of intent with Loop
 Corp., Chicago, to receive approximately $8 million in financing. Loop Corp.,
 which invests in a diverse group of industries, is an affiliate of Leon
 Greenblatt, Chiplease, Inc. and other related organizations. Greenblatt and
 his affiliated companies currently own approximately 25% of HRM's outstanding
 stock.
     Under the terms of the proposed financing, Loop Corp. will provide HRM a
 $5 million letter of credit or other acceptable financing that can be borrowed
 against for capitalizing and increasing HRM's Medicaid HMO operations.
 In addition, Loop Corp. will provide HRM, for its own working capital needs,
 approximately $3 million in the form of 5-year subordinated convertible
 debentures that are initially convertible at $7.42 per share.  Five-year
 warrants for approximately 625,000 shares of HRM stock, exercisable at
 $8.25 per share, will also be granted to Loop Corp.
     The proposed financing with Loop Corp. is subject to completion of due
 diligence and negotiation and execution of definitive agreements acceptable to
 HRM and Loop Corp.
     The company also announced the retirements of founders Gary T. McIlroy,
 MD, HRM chairman and CEO, and Marlene Travis, HRM president and director and
 chairman and CEO of The Institute for Healthcare Quality, Inc., an HRM
 subsidiary.  Vance Kenneth Travis and Raymond G. Schultze, MD, two
 long-standing HRM Board members, also have retired.  Pending selection of the
 new CEO, the function of company CEO will be accomplished by an executive
 committee of the HRM Board consisting of Andrew A. Jahelka (a director of the
 company and president of Loop Corp.), Steven L. Volla, Corbett A. Price and
 Leland LeBlanc (the company's chief financial officer). Volla and Price have
 been elected to the Board; Price will serve as HRM Board chairman.
     At this time, HRM also agreed to increase the percentage of outstanding
 HRM shares Greenblatt and his affiliated companies are permitted to own under
 the standstill agreement from the current 25% to 39.9%, in addition to any
 shares that Loop Corp. may ultimately acquire through the subordinated
 convertible debentures or warrants that are to be part of the proposed
 financing with Loop Corp.
     HRM, with headquarters in Minneapolis, delivers evidence-based health plan
 management and knowledge solutions to the managed care and indemnity
 marketplaces.  HRM also owns Pennsylvania HealthMATE and OakTree
 Health Plans (SM), Medicaid HMO plans in Pennsylvania.
 
     Forward looking statements in this news release reflected as expectations,
 plans, anticipations, prospects or future estimates are subject to the risks
 and the uncertainties present in the Company's business and the competitive
 health care marketplace including, but not limited to clients and vendors
 commonly experiencing mergers or acquisitions, use of estimates for incurred
 but not yet reported claims including medical services payable, use of
 estimates of bonus accruals including accounts receivable, reconciliations,
 volume fluctuations, provider relations and contracting, participant
 enrollment fluctuations, changes in member mix or utilization levels, fixed
 price contracts, contract disputes, contract modifications, contract renewals
 and non-renewals, regulatory issues and requirements, various business reasons
 for delaying contract closings, and the operational challenges of matching
 case volume with optimum staffing, having fully trained staff, having computer
 and telephonic supported operations, and managing turnover of key employees
 and outsourced services to performance standards. While occurrences of these
 risks, and others periodically detailed in the Company's SEC reports, cannot
 be predicted exactly, such occurrences can be expected to have an impact on
 HRM's anticipated level of revenue growth or profitability.
 
 

SOURCE Health Risk Management, Inc.
    MINNEAPOLIS, April 3 /PRNewswire/ --
 Health Risk Management, Inc. (HRM) (Nasdaq:   HRMI) announced a number of
 developments related to external financing as well as changes affecting the
 HRM Board of Directors and management.
     HRM announced the signing of a multi-faceted letter of intent with Loop
 Corp., Chicago, to receive approximately $8 million in financing. Loop Corp.,
 which invests in a diverse group of industries, is an affiliate of Leon
 Greenblatt, Chiplease, Inc. and other related organizations. Greenblatt and
 his affiliated companies currently own approximately 25% of HRM's outstanding
 stock.
     Under the terms of the proposed financing, Loop Corp. will provide HRM a
 $5 million letter of credit or other acceptable financing that can be borrowed
 against for capitalizing and increasing HRM's Medicaid HMO operations.
 In addition, Loop Corp. will provide HRM, for its own working capital needs,
 approximately $3 million in the form of 5-year subordinated convertible
 debentures that are initially convertible at $7.42 per share.  Five-year
 warrants for approximately 625,000 shares of HRM stock, exercisable at
 $8.25 per share, will also be granted to Loop Corp.
     The proposed financing with Loop Corp. is subject to completion of due
 diligence and negotiation and execution of definitive agreements acceptable to
 HRM and Loop Corp.
     The company also announced the retirements of founders Gary T. McIlroy,
 MD, HRM chairman and CEO, and Marlene Travis, HRM president and director and
 chairman and CEO of The Institute for Healthcare Quality, Inc., an HRM
 subsidiary.  Vance Kenneth Travis and Raymond G. Schultze, MD, two
 long-standing HRM Board members, also have retired.  Pending selection of the
 new CEO, the function of company CEO will be accomplished by an executive
 committee of the HRM Board consisting of Andrew A. Jahelka (a director of the
 company and president of Loop Corp.), Steven L. Volla, Corbett A. Price and
 Leland LeBlanc (the company's chief financial officer). Volla and Price have
 been elected to the Board; Price will serve as HRM Board chairman.
     At this time, HRM also agreed to increase the percentage of outstanding
 HRM shares Greenblatt and his affiliated companies are permitted to own under
 the standstill agreement from the current 25% to 39.9%, in addition to any
 shares that Loop Corp. may ultimately acquire through the subordinated
 convertible debentures or warrants that are to be part of the proposed
 financing with Loop Corp.
     HRM, with headquarters in Minneapolis, delivers evidence-based health plan
 management and knowledge solutions to the managed care and indemnity
 marketplaces.  HRM also owns Pennsylvania HealthMATE and OakTree
 Health Plans (SM), Medicaid HMO plans in Pennsylvania.
 
     Forward looking statements in this news release reflected as expectations,
 plans, anticipations, prospects or future estimates are subject to the risks
 and the uncertainties present in the Company's business and the competitive
 health care marketplace including, but not limited to clients and vendors
 commonly experiencing mergers or acquisitions, use of estimates for incurred
 but not yet reported claims including medical services payable, use of
 estimates of bonus accruals including accounts receivable, reconciliations,
 volume fluctuations, provider relations and contracting, participant
 enrollment fluctuations, changes in member mix or utilization levels, fixed
 price contracts, contract disputes, contract modifications, contract renewals
 and non-renewals, regulatory issues and requirements, various business reasons
 for delaying contract closings, and the operational challenges of matching
 case volume with optimum staffing, having fully trained staff, having computer
 and telephonic supported operations, and managing turnover of key employees
 and outsourced services to performance standards. While occurrences of these
 risks, and others periodically detailed in the Company's SEC reports, cannot
 be predicted exactly, such occurrences can be expected to have an impact on
 HRM's anticipated level of revenue growth or profitability.
 
 SOURCE  Health Risk Management, Inc.

RELATED LINKS

http://www.hqi.com