THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Friday, January 31, 1997 TAG: 9701310537
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: 46 lines
The price of Trigon Healthcare Inc.'s common shares was set at $13 late Thursday in preparation for the health insurer's initial public offering of 15.5 million shares today.
If completed as planned, the offering will provide Richmond-based Trigon with almost $200 million of fresh capital.
The investment banking firms underwriting today's offering increased the number of Trigon shares by almost 4 million on Thursday from an earlier goal of 11.54 million shares.
The sale of stock is part of Trigon's conversion from a nonprofit company owned by policyholders to a profit-oriented company owned by investors. Trigon policyholders and state regulators approved the conversion plan last year.
In a recent filing with the Securities and Exchange Commission,Trigon said it planned to use $87.5 million from the public offering to compensate Virginia for tax breaks the company once enjoyed as a nonprofit company.
Trigon also plans to use $11.3 million of the proceeds to compensate some policyholders instead of distributing stock to them.
As part of its conversion, Trigon is scheduled to distribute 31.1 million shares to policyholders.
Trigon, the largest health insurer in Virginia, told policyholders and state regulators that it needed publicly traded shares and additional capital to expand its operations. Broadening its business beyond Virginia was necessary, it said, because of the heightened competition from other health insurers.
With today's offering, Trigon will have 46.55 million common shares outstanding. These shares are scheduled to trade on the New York Stock Exchange under the ticker symbol TGH.
The underwriting is being managed by Merrill Lynch & Co. Four other investment banking and brokerage firms, including Wheat First Butcher Singer of Richmond, are participating in the underwriting.
In a unrelated matter, Trigon has paid another $225,000 to settle regulators' allegations that it violated state insurance law. The settlement earlier this month came as a result of a 1995 state Bureau of Insurance examination of the insurer's three health maintenance organizations.
The company has corrected or is correcting the problems, said Gerald Milsky, the bureau's deputy commissioner for life and health insurance.
MEMO: The Associated Press contributed to this report.