| back

Psychiatric Solutions Receives Stockholder Approval for $25 Million Private Placement Of Convertible Preferred Stock

Nashville, TN - February 4, 2003 -- Psychiatric Solutions, Inc. ("PSI") (NASDAQ: PSYS) announced that, at its special meeting of stockholders today, its stockholders overwhelmingly approved a previously announced private placement of $25 million of PSI's Series A Convertible Preferred Stock (the "preferred stock") with affiliates of Oak Investment Partners and Salix Ventures and with Brown Brothers Harriman & Co.'s The 1818 Mezzanine Fund II, L.P. More than 97% of the shares of PSI common stock voted at the special meeting were in favor of the private placement.

The investors are current investors in PSI, with Oak Investment Partners and Salix Ventures (or related entities) being among the co-founders of PSI. Representatives of Salix Ventures and Brown Brothers Harriman currently serve on PSI's Board of Directors. A representative of Oak Investment is expected to be named to the Company's Board of Directors.

PSI intends to use the net proceeds from the preferred stock primarily to fund acquisitions of freestanding psychiatric patient hospitals. The preferred stock, which was placed through the Company's exclusive financial advisor, Brentwood Capital Advisors LLC, will be issued in two phases. One half of the preferred stock will be issued by the Company on March 31, 2003, and one-half will be issued on June 30, 2003.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statements regarding intent, belief or current expectations of PSI and its management. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause PSI's actual results to differ materially from the results discussed in the forward- looking statements. Risks and uncertainties that might cause such differences include, but are not limited to: (1) potential competition which alters or impedes PSI's acquisition strategy by decreasing PSI's ability to acquire additional hospitals on favorable terms; (2) the ability of PSI to improve the operations of acquired hospitals; (3) the ability to maintain favorable and continuing relationships with physicians who use PSI's facilities; (4) the limited operating history of PSI; (5) the ability to receive timely additional financing on terms acceptable to PSI to fund PSI's acquisition strategy and capital expenditure needs; (6) risks inherent to the healthcare industry, including the impact of unforeseen changes in regulation, reimbursement rates from federal and state healthcare programs or managed care companies and exposure to claims and legal actions by patients and others; and (7) potential difficulties in integrating the operations of PSI with PMR. The forward- looking statements herein are qualified in their entirety by the risk factors set forth in PSI's joint proxy statement/prospectus on Form S-4, dated July 11, 2002, under the caption "Risk Factors." A copy of the Form S-4 may be obtained from the Public Reference Branch of the SEC at 450 Fifth Street NW, Washington, DC at prescribed rates. PSI undertakes no obligation to update any forward-looking statements, whether as a result of news information, future events or otherwise.