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MEDIQ ANNOUNCES PLAN TO SPIN-OFF MENTAL HEALTH MANAGEMENT SUBSIDIARY

MEDIQ ANNOUNCES PLAN TO SPIN-OFF MENTAL HEALTH MANAGEMENT SUBSIDIARY
 PENNSAUKEN, N.J., Sept. 9 /PRNewswire/ -- MEDIQ Incorporated (AMEX: MED) announced today that it was planning a tax-free distribution to all MEDIQ shareholders of 100 percent of the stock of its Mental Health Management, Inc. (MHM) subsidiary, and that it, accordingly, has filed with the Internal Revenue Service a ruling request that the distribution will not be taxable to MEDIQ or its shareholders.
 MEDIQ President and Chief Executive Officer Bernard J. Korman said, "The contemplated spin-off to MEDIQ shareholders of Mental Health Management is another significant step in the implementation of the strategic plan adopted by MEDIQ in November 1990 to more narrowly focus MEDIQ's core health care business. In implementing the plan to enhance shareholder value, MEDIQ has sold a number of subsidiaries; sold approximately 50 percent of the equity of two subsidiaries in initial public offerings, and retained approximately a 50 percent interest with a combined market value of $70 million, reduced parent company senior debt from $120 million to $20 million; and with an acquisition, doubled the size of its subsidiary, MEDIQ/PRN Life Support Services, Inc."
 Korman stated, "At the time of the spin-off to MEDIQ shareholders of Mental Health Management, appropriate adjustments as called for in the debenture documents will be made to the conversion prices of MEDIQ's outstanding convertible subordinated debt. MEDIQ's 7-1/4 percent convertible subordinated debentures due 2006 (AMEX: MED.C) are currently convertible into MEDIQ's common stock at $10.55 per share and MEDIQ's 6 percent subordinated debentures due Jan. 1, 1994, are convertible into MEDIQ stock at $8 per share."
 Further details of the distribution will be made public when the IRS ruling is received.
 Mental Health Management, headquartered in McLean, Va., is the nation's leading provider of contract psychiatric care services to not- for-profit acute care hospitals. Through long-term contracts, MHM manages in-patient and partial hospitalization psychiatric care programs for adults, adolescents and the elderly.
 In addition, MHM owns or operates five free-standing facilities, including a 57-bed alcoholism treatment facility in Maryland, a 40-bed psychiatric hospital in California, a 40-bed psychiatric hospital in New Mexico, a 25-bed psychiatric hospital in Arizona, and a 71-bed psychiatric hospital in Cleveland. MHM with annual net revenues of $45 million had operating income for the nine months of fiscal 1992 of approximately $3.2 million.
 MEDIQ Incorporated, whose shares (MED and MED.Pr) and debentures (MED.C) are traded on the American Stock Exchange, provides products and services to hospitals, nursing homes, healthcare professionals and consumers through its subsidiaries. MEDIQ's businesses include pharmaceutical packaging, manufacturing and marketing of healthcare products, medical equipment rental, management and ownership of psychiatric units, diagnostic imaging and testing, maintenance of diagnostic equipment, healthcare facility planning, design and project management, and utilization review of medical claims made to insurance companies.
 /delval/
 -0- 9/9/92
 /CONTACT: Michael F. Sandler, senior vp-finance of MEDIQ, 609-665-9300, ext. 6005/
 (MED) CO: MEDIQ Incorporated; Mental Health Management, Inc. ST: New Jersey, Virginia IN: HEA SU:


JS-MK -- PH015 -- 7472 09/09/92 11:38 EDT
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Publication:PR Newswire
Date:Sep 9, 1992
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