HealthPlan Services Announces Agreement To Sell TPA and MGU Businesses

Apr 02, 2001, 01:00 ET from HealthPlan Services Corporation

    TAMPA, Fla., April 2 /PRNewswire/ -- HealthPlan Services Corporation
 (NYSE:   HPS) announced today that it has entered into a definitive stock
 purchase agreement to sell its Third Party Administration and Managing General
 Underwriter business units to HealthPlan Holdings, Inc., an affiliate of Sun
 Capital Partners, Inc., a Boca Raton, Florida-based merchant banking firm, for
 approximately $30 million.  The Third Party Administration business includes
 the Small Group Business operations and its associated data processing
 facilities based in Tampa, Florida, as well as the Taft-Hartley businesses
 that operate under the names American Plan Benefit Administrators and Southern
 Nevada Administrators, based in El Monte, California, and Las Vegas, Nevada,
 respectively.  The MGU business is Philadelphia-based Montgomery Management
 Corporation.  In connection with this non-cash transaction, Sun Capital will
 be assuming up to $40 million in working capital deficit of the acquired
 businesses and holding a long-term subordinated note from HealthPlan Services
 of up to $10 million.
     The transaction is supported by the management of the acquired entities.
 In particular, Jeffery W. Bak, current TPA division Executive Vice President
 and Chief Operating Officer, will assume the position of President and Chief
 Executive Officer of the acquired business after closing and participate as an
 investor in the transaction.  Other members of management will also
 participate.  Headquarters for the acquired entities will remain in Tampa,
 Florida.  The transaction is expected to close within 30 to 60 days and is
 subject to normal and customary closing conditions, including financing and
 the approval of HPS's Bank Group, and contains indemnification and transition
 obligations.
     HPS management also indicated it has delayed its annual filing of Form 10K
 for the year ended December 31, 2000 to reflect the transaction.  In
 particular, HPS expects to record a pre-tax impairment of goodwill in the
 approximate amount of $80 million, which represents the Company's estimated
 pre-tax loss on the sale of the divested businesses.  At closing, the
 divestiture will generate $20-24 million in tax loss benefits to HPS, which
 will reduce the Company's tax payment obligations during the next 18-24
 months.
     According to Company President and Chief Executive Officer Phillip S.
 Dingle, "The sale of our TPA and MGU operation marks the completion of the
 divestiture strategy we initiated last June.  For our TPA and MGU customers,
 the impressive financial and operations-focused organization of Sun Capital
 should enhance the already superior service level they have been receiving by
 a group of dedicated and talented professionals."
     M. Steven Liff, Vice President of Sun Capital, stated, "We are very
 enthusiastic regarding the future of the businesses we are acquiring.  These
 are market leaders that have had operational challenges over the past few
 years, but each possess tremendous franchise value within their defined niche.
 As we are a firm focused on acquiring underperforming companies, this
 represents an opportunity that fits very well within our acquisition profile.
 All three companies have strong key client relationships that are leaders in
 their respective markets.  We also believe the growth prospects here are
 tremendous, and with an investment in the business, both financially and
 operationally, we believe we can enhance margins and build upon the successes
 these companies have already achieved."
     Bak added, "This transaction represents a significant opportunity for the
 management team.  Perhaps more importantly, it will benefit our agents, our
 customers, and our associates.  Because we will have better access to
 investment capital, we will focus on enhancing our principal service and
 technology platforms.  Almost immediately, we will begin exporting our core
 technology, administration, and distribution competencies to our union
 administration business.  You should also expect us to expand our existing
 products and services portfolio to reach new customers.  The bottom line is
 that these are good businesses, and the addition of Sun Capital will
 accelerate our efforts to make them great."
     HealthPlan Services is a leading managed health care services company,
 providing medical cost containment and third party administration services for
 health care payers and providers.  HealthPlan Services' medical cost
 containment business includes PlanVista Solutions, one of the nation's largest
 independently owned full-service preferred provider organizations.  PlanVista
 Solutions provides network access, electronic claims repricing, and claims and
 data management services to health care payers and provider networks
 throughout the United States.  HealthPlan Services' third party administration
 business provides distribution, enrollment, billing and collection, and claims
 administration services for insurance companies, HMOs and other managed care
 organizations, and Taft-Hartley union benefit plans.  Visit the company's
 websites at www.healthplan.com and www.nppn.com.
     Sun Capital is a leading merchant banking firm focused on leveraged
 buyouts and venture capital investments.  Sun Capital invests in unique and
 niche oriented companies with market leadership positions.  Sun Capital has
 invested in more than thirty companies during the past several years with
 combined sales in excess of $1 billion.  Investments have included companies
 in the following industries: paper and packaging, filmed entertainment,
 automotive after-market parts, financial services, healthcare, media and
 communications, outdoor advertising, building products, wireless
 communication, industrial and decorative mirrors, computer and workstation
 peripherals, and Internet and technology.  Sun Capital's financing partners
 have included some of the largest and best-known banks and mezzanine lenders
 including Chase Manhattan Bank, Bank One, Fleet, CIT, Bankers Trust, Midwest
 Mezzanine, Met Life and Equinox.
     This press release, particularly the statements made by Messrs. Dingle,
 Liff, and Bak, includes forward-looking statements related to HealthPlan
 Services that involve risks and uncertainties including, but not limited to
 our ability to expand our client base; the success of our diversification
 efforts; our ability to manage costs and reduce and restructure debt; changes
 in law; fluctuations in business conditions and the economy; and our ability
 to attract and retain key management personnel.  These forward-looking
 statements are made in reliance on the "safe harbor" provisions of the Private
 Securities Litigation Reform Act of 1995.  For further information about these
 factors that could affect the Company's future results, please see the
 Company's filings with the Securities and Exchange Commission.  Copies of
 these filings are available upon request from the Company's chief financial
 officer.  Prospective investors are cautioned that forward-looking statements
 are not guarantees of future performance.  Achieved results may differ
 materially from management expectations.
 
 

SOURCE HealthPlan Services Corporation
    TAMPA, Fla., April 2 /PRNewswire/ -- HealthPlan Services Corporation
 (NYSE:   HPS) announced today that it has entered into a definitive stock
 purchase agreement to sell its Third Party Administration and Managing General
 Underwriter business units to HealthPlan Holdings, Inc., an affiliate of Sun
 Capital Partners, Inc., a Boca Raton, Florida-based merchant banking firm, for
 approximately $30 million.  The Third Party Administration business includes
 the Small Group Business operations and its associated data processing
 facilities based in Tampa, Florida, as well as the Taft-Hartley businesses
 that operate under the names American Plan Benefit Administrators and Southern
 Nevada Administrators, based in El Monte, California, and Las Vegas, Nevada,
 respectively.  The MGU business is Philadelphia-based Montgomery Management
 Corporation.  In connection with this non-cash transaction, Sun Capital will
 be assuming up to $40 million in working capital deficit of the acquired
 businesses and holding a long-term subordinated note from HealthPlan Services
 of up to $10 million.
     The transaction is supported by the management of the acquired entities.
 In particular, Jeffery W. Bak, current TPA division Executive Vice President
 and Chief Operating Officer, will assume the position of President and Chief
 Executive Officer of the acquired business after closing and participate as an
 investor in the transaction.  Other members of management will also
 participate.  Headquarters for the acquired entities will remain in Tampa,
 Florida.  The transaction is expected to close within 30 to 60 days and is
 subject to normal and customary closing conditions, including financing and
 the approval of HPS's Bank Group, and contains indemnification and transition
 obligations.
     HPS management also indicated it has delayed its annual filing of Form 10K
 for the year ended December 31, 2000 to reflect the transaction.  In
 particular, HPS expects to record a pre-tax impairment of goodwill in the
 approximate amount of $80 million, which represents the Company's estimated
 pre-tax loss on the sale of the divested businesses.  At closing, the
 divestiture will generate $20-24 million in tax loss benefits to HPS, which
 will reduce the Company's tax payment obligations during the next 18-24
 months.
     According to Company President and Chief Executive Officer Phillip S.
 Dingle, "The sale of our TPA and MGU operation marks the completion of the
 divestiture strategy we initiated last June.  For our TPA and MGU customers,
 the impressive financial and operations-focused organization of Sun Capital
 should enhance the already superior service level they have been receiving by
 a group of dedicated and talented professionals."
     M. Steven Liff, Vice President of Sun Capital, stated, "We are very
 enthusiastic regarding the future of the businesses we are acquiring.  These
 are market leaders that have had operational challenges over the past few
 years, but each possess tremendous franchise value within their defined niche.
 As we are a firm focused on acquiring underperforming companies, this
 represents an opportunity that fits very well within our acquisition profile.
 All three companies have strong key client relationships that are leaders in
 their respective markets.  We also believe the growth prospects here are
 tremendous, and with an investment in the business, both financially and
 operationally, we believe we can enhance margins and build upon the successes
 these companies have already achieved."
     Bak added, "This transaction represents a significant opportunity for the
 management team.  Perhaps more importantly, it will benefit our agents, our
 customers, and our associates.  Because we will have better access to
 investment capital, we will focus on enhancing our principal service and
 technology platforms.  Almost immediately, we will begin exporting our core
 technology, administration, and distribution competencies to our union
 administration business.  You should also expect us to expand our existing
 products and services portfolio to reach new customers.  The bottom line is
 that these are good businesses, and the addition of Sun Capital will
 accelerate our efforts to make them great."
     HealthPlan Services is a leading managed health care services company,
 providing medical cost containment and third party administration services for
 health care payers and providers.  HealthPlan Services' medical cost
 containment business includes PlanVista Solutions, one of the nation's largest
 independently owned full-service preferred provider organizations.  PlanVista
 Solutions provides network access, electronic claims repricing, and claims and
 data management services to health care payers and provider networks
 throughout the United States.  HealthPlan Services' third party administration
 business provides distribution, enrollment, billing and collection, and claims
 administration services for insurance companies, HMOs and other managed care
 organizations, and Taft-Hartley union benefit plans.  Visit the company's
 websites at www.healthplan.com and www.nppn.com.
     Sun Capital is a leading merchant banking firm focused on leveraged
 buyouts and venture capital investments.  Sun Capital invests in unique and
 niche oriented companies with market leadership positions.  Sun Capital has
 invested in more than thirty companies during the past several years with
 combined sales in excess of $1 billion.  Investments have included companies
 in the following industries: paper and packaging, filmed entertainment,
 automotive after-market parts, financial services, healthcare, media and
 communications, outdoor advertising, building products, wireless
 communication, industrial and decorative mirrors, computer and workstation
 peripherals, and Internet and technology.  Sun Capital's financing partners
 have included some of the largest and best-known banks and mezzanine lenders
 including Chase Manhattan Bank, Bank One, Fleet, CIT, Bankers Trust, Midwest
 Mezzanine, Met Life and Equinox.
     This press release, particularly the statements made by Messrs. Dingle,
 Liff, and Bak, includes forward-looking statements related to HealthPlan
 Services that involve risks and uncertainties including, but not limited to
 our ability to expand our client base; the success of our diversification
 efforts; our ability to manage costs and reduce and restructure debt; changes
 in law; fluctuations in business conditions and the economy; and our ability
 to attract and retain key management personnel.  These forward-looking
 statements are made in reliance on the "safe harbor" provisions of the Private
 Securities Litigation Reform Act of 1995.  For further information about these
 factors that could affect the Company's future results, please see the
 Company's filings with the Securities and Exchange Commission.  Copies of
 these filings are available upon request from the Company's chief financial
 officer.  Prospective investors are cautioned that forward-looking statements
 are not guarantees of future performance.  Achieved results may differ
 materially from management expectations.
 
 SOURCE  HealthPlan Services Corporation