Washington Dental Service Plan of Reorganization and Merger
Washington Dental Service filed an application for its plan of reorganization and merger transaction that includes a proposed reverse merger of Washington Dental Service with and into a DD of Washington subsidiary to become a subsidiary of an existing holding company.
Washington Dental Service is a Washington domiciled nonprofit company operating as a health care service contractor incorporated in 1955. DD of Washington was formed in 2009 as a Washington domiciled nonprofit corporation under chapter 24.03 RCW for the purpose of becoming a holding company through a proposed reorganization. Its subsidiary, WDS Merger Sub, was also established in 2009 as a Washington domiciled nonprofit corporation under chapter 24.03 RCW for the sole purpose to facilitate the proposed reverse merger transaction so that DD of Washington would become the direct owner of Washington Dental Service.
The proposed transaction also includes:
1) The corporate name changes for the current Washington Dental Service to Delta Dental of Washington, and DD of Washington to Washington Dental Service;
2) Delta Dental of Washington would convert from a chapter 24.03 corporation to a chapter 24.06 corporation under Washington laws, and;
3) The ownership of subsidiaries that is currently held by the old Washington Dental Service (the health care service contractor) would transfer through an extraordinary distribution (dividend) to the new Washington Dental Service (the newly controlling holding company). Encara Corporation will remain as a 20 percent owned subsidiary of the health care service contractor.
In the end, the new Washington Dental Service (formally DD of Washington), as a controlling holding company, would be the direct owner of Delta Dental of Washington (formally Washington Dental Service), the health care service contractor, and would directly and indirectly control its current subsidiaries within its new holding company system.
The boards of directors of both companies have approved the “Agreement and Plan of Merger.” The commissioner must approve the proposed transaction before it can be completed. Corporate documents regarding the transaction are available.
History of the process
In March 2013, we received the application for the transaction. We are reviewing that application and will later send the application to the OIC Hearings Unit. The judge will schedule a hearing to decide on the proposed merger.
Copies of the proposed transaction will later be available on the Commissioner’s website or provided through a public disclosure request.
What we look at
In all proposed mergers, the companies must file an application that details:
- A plan of merger including corporate documents supporting the proposed merger;
- Financial information for both companies;
- The effect of the merger on the current Washington policyholders;
- Any changes in their business plan; and
- Any market competition impacts.
Under state law (RCW 48.31.010), the commissioner must approve the merger unless:
- The plan of merger is not fair, equitable, or consistent with law; or
- A reasonable objection exists.