Blue Cross of California requests Department of Corporations approval for its public benefit program; $3 billion to endow California health care foundations.WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Feb. 20, 1996--Blue Cross of California (BCC (Blind Carbon Copy) The field in an e-mail header that names additional recipients for the message. It is similar to carbon copy (cc), but the names do not appear in the recipient's message. Not all e-mail systems support the bcc feature. See fcc. ) Tuesday announced that it entered into a definitive agreement with its for-profit subsidiary WellPoint Health Networks Inc. (WellPoint) for a recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. of WellPoint, and has asked the California Department of Corporations (DOC) for approval of the transaction in preparation for the contribution of all of its assets, valued at approximately $3 billion, to two new charitable foundations. If approved, the recapitalization will make possible the largest health-related charitable contribution charitable contribution n. in taxation, a contribution to an organization which is officially created for charitable, religious, educational, scientific, artistic, literary, or other good works. in California history. The transaction will result in the foundations receiving a cash endowment of more than $1.0 billion and an equity interest valued at over $2 billion in one of the largest publicly traded managed care companies in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . One foundation will receive approximately $900 million in cash and the other foundation will receive the remaining cash and the equity interest. Leonard D. Schaeffer, BCC Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated: "This historic transaction establishes a public benefit health care legacy created by Blue Cross of California. After a great deal of analysis, we are confident that the strategy selected by the BCC Board of Directors will produce the most economic value for the people of California. It provides a significant amount of cash to the foundations immediately, but even more importantly, Californians stand to benefit from the growth potential of the foundations' holdings in WellPoint for years to come." In September of 1994, BCC announced its intention, as part of a Public Benefit Plan filed with the DOC, to donate all of its public benefit assets to a new foundation dedicated to improving the health of Californians. The transaction provides for: o More than $1.0 billion in cash to BCC from WellPoint, consisting of a cash payment of $10 per share for BCC's 80 million shares of WellPoint stock, and payment of up to $235 million for BCC's remaining commercial assets. This cash will be donated to the two foundations. o An 80.4 percent equity interest in the new WellPoint entity which will be created by the merger of WellPoint into BCC following BCC's conversion to for-profit status. This interest will be issued to one of the new foundations In mathematical logic, New Foundations (NF) is an axiomatic set theory, conceived by Willard Van Orman Quine as a simplification of the theory of types of Principia Mathematica. . The mission of the new foundations will be to increase health care access and affordability for uninsured and underserved Californians. The program initiatives outlined in BCC's September 1994 Public Benefit Plan have been refined to reflect the dialogue BCC has had with the DOC, community organizations, health experts and the public. BCC has also undertaken an extensive planning process which the foundations will use to help guide their public benefit initiatives. This dedication of assets to charitable purposes will have no impact on Blue Cross customers, nor on contracts with the physicians, hospitals and other providers in its extensive networks. WellPoint will continue to use the Blue Cross name and mark in California. The company's Board of Directors will consist of four independent directors designated by WellPoint, three independent directors designated by BCC, and Leonard D. Schaeffer, Chairman and CEO. Completion of the recapitalization is subject to DOC and other regulatory approvals and to a vote of WellPoint stockholders. The transaction is expected to close in the second quarter of 1996. Blue Cross of California is a non-profit, public benefit, managed health care corporation serving more than 6.8 million Californians. Blue Cross is the majority shareholder of WellPoint Health Networks Inc. (NYSE NYSE See: New York Stock Exchange :WLP WLP WebLogic Portal (Bea Systems) WLP Wafer Level Packaging WLP Women's Learning Partnership (Bethesda, MD) WLP Workplace Learning & Performance WLP World Library Partnership, Inc. ), the largest publicly traded managed health care company in the state. BCC and WellPoint offer health maintenance organizations (HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, ), preferred provider organizations pre·ferred provider organization n. Abbr. PPO A medical insurance plan in which members receive more coverage if they choose health care providers approved by or affiliated with the plan. (PPO PPO abbr. preferred provider organization PPO Managed care Preferred provider organization, see there Infectious disease Pleuropneumonia-like organism, see there ), and specialty managed health care networks. Total benefits paid out on behalf of BCC subscribers and Medicare beneficiaries in 1994 exceeded $9.9 billion. CONTACT: Larry Bryant 818/703-2473 |
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