Highmark Inc, one of America's largest health insurers, had announced the completion of a bondholder buyout in the amount of US$604.2 million for West Penn Allegheny Health System. The value of the buyout was at US$0.875 to the dollar.
The buyout sw Highmark acquiring 85% of the outstanding prinicpal amount of municipal bonds owned by West Penn. At the same time, Pennsylvania insurance regulators had stamped their approval on the proposed merger.
West Penn also had additional investments amounting to nearly US$475 million pushing the overall price to US$1.1 billion. There was a previous deal in place, which forced West Penn and Highmark to meet in court and open the door to a possible petition for bankruptcy protection for West Penn. This petition would help pave the way to the decrease in the overall debt of the company amounting to US$710 million.
A court order prevented West Penn from seeking other possible investors based on the earlier agreement. This forced the two, together with bondholders to resume negotiations. The formalization of the deal was announced back in January but it needed the approval of state regulators to make it valid and enforceable.
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