<PAGE> 1
EXHIBIT 99(a)
OXFORD HEALTH PLANS, INC.
ANNOUNCES $220 MILLION TPG EXCHANGE AND
REPURCHASE AGREEMENT AND RELATED REFINANCING PLANS
TRUMBULL, CONNECTICUT, October 25, 2000 Oxford Health Plans, Inc. (NASDAQ: OXHP)
announced today that it has reached an agreement with Texas Pacific Group and
other investors (the "TPG Investors") to repurchase certain of their Preferred
Stock and warrants for $220 million coupled with the exchange of all remaining
Preferred Stock and warrants for common stock (the "TPG exchange agreement").
The Company also announced that it plans to initiate a cash tender offer with
consent solicitation for of all of its $193.5 million 11% Senior Notes (the
"Senior Note tender"). The TPG exchange agreement is contingent upon the Company
successfully completing the Senior Note tender as well as obtaining new bank
credit facilities.
Under the terms of the TPG exchange agreement, Oxford will repurchase certain
Preferred Stock and warrants for 11.5 million shares at an aggregate cost of
$220 million. The TPG Investors will simultaneously exchange their remaining
$195 million of Preferred Stock and remaining warrants for 11 million shares of
common stock. Once the TPG exchange agreement is consummated, the TPG Investors
will own approximately 11 million shares of Oxford common stock, all of their
original investment of $350 million made in May 1998 will have been repaid and
no Preferred Stock or warrants will remain outstanding. The 1998 investment
agreement between Texas Pacific Group and Oxford will terminate at the time the
TPG exchange agreement is consummated. According to Norman C. Payson MD,
Oxford's Chairman and CEO, "This concludes the turnaround era at Oxford. The
financing obtained from the TPG Investors was central to the Company's
turnaround plan. With the turnaround completed, such financing is no longer
necessary and is expensive for our common shareholders. This transaction
eliminates that debt, improves our capital structure.
"The combination of the expected new credit facilities in the $300 million to
$400 million range, Senior Note tender and TPG exchange agreement will add
approximately $0.19 to our net earnings in 2001, assuming 104 million diluted
common shares outstanding. The Company's outstanding diluted common shares will
increase upon consummation of the TPG exchange agreement by approximately 1.8
million shares from September 30, 2000 levels. On a pro forma basis, Oxford's
September 30th debt to capital ratio improves from approximately 58% to 42%
after adjusting for the TPG exchange agreement, the Senior Note tender and
estimated outstanding new financings of approximately $220 million. The
consummation of the TPG exchange agreement (currently expected in the fourth
quarter) will result in a non-cash write-off of unamortized Preferred Stock
discount and 1998 issuance expenses of approximately $38 million. At the time
the Senior Note tender is completed, which is also currently expected to occur
in the fourth quarter, the Company will also record an extraordinary charge of
approximately $16 million, net of tax," said Kurt B. Thompson, Oxford's Chief
Financial Officer.
Founded in 1984, Oxford Health Plans, Inc. provides health plans to employers
and individuals in New York, New Jersey and Connecticut, through its direct
sales force, independent insurance agents and brokers. Oxford's services include
traditional health maintenance organizations, point-of-service plans, third
party administration of employer-funded benefits plans and Medicare plans.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release, including statements concerning the
future effects of the TPG exchange agreement, Senior Note tender and related
refinancing on the Company's future results of operations, capital structure and
financial position, and other statements contained herein regarding matters that
are not historical facts, are forward-looking statements (as such term is
defined in the Securities Exchange Act of 1934); and because such statements
involve risks and uncertainties, actual
4
<PAGE> 2
results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially include, but are not limited to:
- The Company's ability to complete the Senior Note tender and required
bank financing which are each necessary to permit the TPG exchange
agreement to close.
- Changes in Federal or State regulation relating to health care and
health benefit plans, including proposed patient protection legislation
and mandated benefits.
- Rising medical costs or higher utilization of medical services,
including higher out-of-network utilization under point-of-service
plans and new drugs and technologies.
- Competitive pressure on the pricing of the Company's products,
including acceptance of premium rate increases by the Company's
commercial groups.
- Higher than expected administrative costs in operating the Company's
business and the cost and impact on service of changing technologies.
- The ability of the Company to operationalize risk transfer and other
provider arrangements and the resolution of existing and future
disputes over the reconciliations and performance under such
arrangements.
- Any changes in the Company's estimates of its medical costs and
expected cost trends.
- The impact of future developments in various litigation (including
pending class and derivative actions filed against the Company and
certain of its officers and directors, and other proceedings commenced
against the Company and several employees by certain healthcare
providers), the recent ERISA class action in Connecticut and related
litigation by the Connecticut Attorney General, regulatory proceedings
and other governmental action (including the ongoing examination,
investigation and review of the Company by various Federal and State
authorities).
- The Company's ability to renew existing members and attract new
members.
- The Company's ability to develop processes and systems to support its
operations and any future growth.
- Those factors included in the discussion under the caption "Business -
Cautionary Statement Regarding Forward-Looking Statements" in the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1999 and under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Cautionary Statement
Regarding Forward-Looking Statements" in the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 2000.
5
