Exhibit 99.1

Onex Corporation
Canada Trust Tower
161 Bay Street - 49^th Floor
Toronto, Ontario M5J 2S1
Canada
Fax no. (416) 362-5765

June 25, 2003

Magellan Health Services, Inc.
6950 Columbia Gateway, Suite 400
Columbia, MD 21046
Attention: Mark S. Demilio

Re: Amended Funding Commitment

Gentlemen:

The undersigned (the “Investor”) previously entered into a Funding Commitment dated as of May 27, 2003 (the “Commitment Letter”) with Magellan Health Services, Inc., (together with all direct and indirect subsidiaries, “Magellan,” and such companies as reorganized in chapter 11 reorganization cases (the “Chapter 11 Cases”), “Reorganized Magellan”) pursuant to a chapter 11 plan of reorganization (the “Modified Plan”) that shall be in form and substance materially consistent with the Plan of Reorganization filed by Magellan on May 26, 2003 (with such changes as required to incorporate the terms of this Amended Commitment Letter and the Amended Term Sheet (the “Plan Terms”), which Modified Plan Magellan will seek to confirm as expeditiously as possible in such Chapter 11 Cases.

The Investor, by this Amended Funding Commitment Letter (the “Amended Commitment Letter”) is now pleased to provide, on the terms set forth herein (which, if adopted and approved by the Bankruptcy Court, supersede in their entirety the terms set forth in the Commitment Letter), a commitment to invest $150 million (the “Investment”) to purchase certain MVS Securities (as defined in the accompanying term sheet (the “Amended Term Sheet”)) which shall be convertible into common stock of Reorganized Magellan. The proceeds of the Investment are to be used by Reorganized Magellan as set forth in the Amended Term Sheet. The Investor’s commitment for the Investment is subject solely to the conditions set forth in the Amended Term Sheet. Capitalized terms used in this commitment without definition shall have the meanings given to them in the Amended Term Sheet.

Upon reasonable notice and subject to the terms and conditions of the confidentiality agreement, dated February 21, 2003, by and between Magellan and the Investor (the “Confidentiality Agreement”), Magellan will afford the Investor and its counsel, accountants and other representatives (collectively, “Representatives”) full and complete access to the books, records and properties of Magellan and the opportunity to discuss the business, affairs and finances of Magellan with directors, officers, employees, accountants, attorneys and representatives of Magellan in order to enable the Investor and its Representatives to make such investigations of Magellan and its respective businesses as they deem appropriate. Magellan agrees that it will cause the officers and employees of Magellan, and will request its legal counsel and accountants, to cooperate so that the Investor can complete such review, including promptly disclosing to the Investor any material facts known to such parties which has resulted in, or could be expected to result in, a material adverse change of the type referred to in the section captioned “Conditions Precedent” in the Amended Term Sheet.

Magellan agrees to reimburse the Investor for all reasonable actual fees and expenses as set forth in the Amended Term Sheet. The obligations of Magellan to reimburse expenses as provided herein (the “Expense Obligations”) shall remain effective whether or not any definitive documentation is executed and notwithstanding any termination of this Amended Commitment Letter and shall be binding upon Reorganized Magellan in the event that any plan of reorganization of Magellan is consummated.

Excluding any Indemnity Claim (as defined herein) arising solely from an Indemnified Party’s (as defined herein) breach of this Amended Commitment Letter or breach of any other agreements between an Indemnified Party and Magellan, or among an Indemnified Party and the Reorganized Magellan, Magellan agrees to indemnify and hold harmless the Investor and its affiliates, directors, officers, partners, members, employees, agents and assignees (including affiliates thereof) (each an “Indemnified Party”) from and against any and all losses, claims, damages, liabilities or other expenses to which such Indemnified Party may become subject, insofar as such losses, claims, damages, liabilities (or actions or other proceedings commenced or threatened in respect thereof) or other expenses arise out of or in any way relate to or result from this Amended Commitment Letter or the Amended Term Sheet, or in any way arise from any use or intended use of this Amended Commitment Letter, the Amended Term Sheet or the proceeds of the Investment, and Magellan agrees to reimburse (on an as-incurred monthly basis) each Indemnified Party for any legal or other expenses incurred in connection with investigating, defending or participating in any such loss, claim, damage, liability or action or other proceeding (whether or not such Indemnified Party is a party to any action or proceeding out of which indemnified expenses arise), but excluding therefrom all expenses, losses, claims, damages and liabilities that are finally determined in a non-appealable decision of a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Indemnified Party (each, an “Indemnity Claim”). In the event of any litigation or dispute involving this Amended Commitment Letter and/or the Amended Term Sheet, the Investor shall not be responsible or liable to Magellan or any other person or entity for any special, indirect, consequential, incidental or punitive damages. The obligations of Magellan under this paragraph (the “Indemnification Obligations”) shall remain effective whether or not any of the transactions contemplated in this Amended Commitment Letter are consummated, any definitive legal documentation is executed and notwithstanding any termination of this Amended Commitment Letter and shall be binding upon Reorganized Magellan in the event that any plan of

reorganization of Magellan is consummated. Magellan shall obtain Bankruptcy Court approval of this Amended Commitment Letter and of the Amended Term Sheet on or before July 10, 2003.

Magellan hereby agrees to pay the Investor the Break-Up Fee and Closing Fee on the terms and subject to the conditions set forth in the Amended Term Sheet. The obligation to the pay any Break-Up Fee and Closing Fee as provided herein shall be binding upon Reorganized Magellan in the event any plan of reorganization for Magellan is consummated.

Except as provided herein, Magellan agrees that, once paid, the fees or any part thereof payable hereunder and under the Amended Term Sheet shall not be refundable or form the basis of any defense, setoff, or recoupment claim under any circumstances, regardless of whether the transactions contemplated by the Amended Term Sheet are consummated. All fees payable hereunder shall be paid in immediately available funds. Damages recoverable by the Investor for breach of this Amended Commitment Letter and the Amended Term Sheet shall be limited in amount to the combined amounts due to the Investor on account of the Break-Up Fee; no special, indirect, consequential, incidental, punitive or other damages shall be recoverable by the Investor as a result of such a breach.

Magellan represents and warrants that (i) all written information and other materials concerning Magellan, Reorganized Magellan and the Plan (the “Information”) which has been, or is hereafter, prepared by, or on behalf of, Magellan and delivered to the Investor is, or when delivered will be, when considered as a whole, complete and correct in all material respects and does not, or will not when delivered, contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statement has been made and (ii) to the extent that any such Information contains projections, such projections were prepared in good faith on the basis of (A) assumptions, methods and tests which were believed by Magellan to be reasonable and (B) information believed by Magellan to have been accurate based upon the information available to Magellan, in each case, at the time such projections were furnished to the Investor.

Magellan shall not issue any press release that references the Investor or the Investment without the consent of the Investor, which consent shall not be unreasonably withheld; provided, however, that if Magellan has provided the Investor with a copy of the press release, and the Investor has not responded within four (4) business day hours, Magellan may proceed with issuance of the press release.

This Amended Commitment Letter, including the attached Amended Term Sheet (a) supersedes, if accepted and approved by the Bankruptcy Court, all prior discussions, agreements, commitments, arrangements, negotiations or understandings, whether oral or written, of the parties with respect thereto, including, without limitation, the Commitment Letter and the Term Sheet; (b) shall be governed, except to the extent that the Bankruptcy Code is applicable, by the laws of the State of New York, without giving effect to the conflict of laws provisions thereof; (c) shall not be assignable by you without the prior written consent of the Investors (and any purported assignment without such consent shall be null and void); (d) is intended to be solely for the benefit of the parties hereto and is not intended to confer any

benefits upon, or create any rights in favor of, any person other than the parties hereto; and (e) may not be amended or waived except by an instrument in writing signed by Magellan and the Investor.

This Amended Commitment Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Amended Commitment Letter by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

Notwithstanding anything herein to the contrary, the obligations of Magellan hereunder and under the Amended Term Sheet are subject to the approval of the Bankruptcy Court having jurisdiction with respect to the Chapter 11 Cases.

If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms hereof and of the Amended Term Sheet by returning to us executed counterparts hereof not later than noon, New York City time, on June 26, 2003. This Commitment Letter will become effective upon the mutual exchange of executed counterparts hereof. This Commitment Letter shall expire at noon, New York City time, on June 26, 2003, unless it has previously become effective. The Investor’s commitment and agreements herein will expire at such time in the event the Investor has not received such executed counterparts in accordance with the immediately preceding sentence.

The Investor’s commitment and agreements under the Commitment Letter and the Term Sheet shall remain in full force and effect and be in not way affected by the terms and conditions of this Amended Commitment Letter and the Amended Term Sheet unless and until this Amended Commitment Letter and the Amended Term Sheet have been finally approved by an Order of the Bankruptcy Court.

Very truly yours,

	ONEX CORPORATION

	By:	/s/ Robert M. LeBlanc

		Name:	Robert M. LeBlanc
		Title:		Managing Director

Agreed and accepted as of the date first above written:

MAGELLAN HEALTH SERVICES, INC.

By:	/s/ Mark S. Demilio
	Name: Mark S. Demilio
	Title: EVP, Chief Financial Officer

EXHIBIT “A”

Amended Term Sheet

This Term Sheet is part of the commitment letter dated June 25, 2003 (the “Amended Commitment Letter”), addressed to Magellan by the Investor and is subject to the terms and conditions of the Amended Commitment Letter. Capitalized terms used herein shall have the meanings set forth in the Amended Commitment letter unless otherwise defined herein.

ISSUER:		Magellan Health Services, Inc.

SECURITIES:		Up to $150 million of a separate class of common stock (the “MVS Securities”) of Reorganized Magellan. Common shares in Reorganized Magellan to be issued to creditors under the modified Plan of Reorganization (the “Modified Plan”) to be filed in Magellan’s Chapter 11 cases shall be referred to as New Common Stock. The MVS Securities and the New Common Stock will be identical in all respects, except with respect to voting and except that (a) the MVS Securities will be convertible into New Common Stock, as provided herein and (b) the Investor and its affiliates may convert shares of New Common Stock that they may acquire into MVS Securities having equivalent economic equity interests unless no MVS Securities are then outstanding. In exchange for such investment, the Investor shall receive shares of MVS Securities on the effective date of the Plan (the “Effective Date”), which MVS Securities (a) shall be entitled to exercise 50% of the voting rights pertaining to all of Reorganized Magellan’s outstanding common stock (including the New Common Stock and the MVS Securities) and (b) shall represent up to 34.48%(1) of the economic equity interests in Reorganized Magellan, but no less than 17.24% of the economic equity interests in Reorganized Magellan. The MVS Securities shall be convertible into shares of New Common Stock having equivalent economic equity interests in Reorganized Magellan upon the transfer of the MVS Securities to any person other than Onex Corporation or an entity controlled by Onex Corporation (including a change of control of the entity owning the MVS Securities so that it is no longer controlled by Onex Corporation); provided, further that all MVS Securities shall be converted into shares of New Common Stock if either (i) the number of outstanding MVS Securities is less than 15.67% of the total number of MVS Securities and shares of New Common Stock issued on the Effective Date or (ii) MVS Securities represent less

(1) These percentages are determined by using a pre-money valuation of $285 million.

		than 10% of the outstanding economic common equity interests in Reorganized Magellan (such number of shares specified in clause (i) or (ii), the “Minimum Hold”). Subject to the terms hereof (and potential reduction as a result of the sale of New Common Stock to Participating Other Holders (as defined herein)), the aggregate purchase price (the “Purchase Price”) for the MVS Securities purchased pursuant to this section will be $150 million payable in cash. Closing on the investment will take place on the Effective Date, by the delivery to Magellan (or Reorganized Magellan), by wire transfer of immediately available funds, of the Purchase Price.

		The holders of unsecured claims in Class 7 under Magellan’s Modified Plan shall have the right to purchase their respective pro-rata portions, based upon the allowed amount of their respective class 7 Claims, (the “Subscription Rights”) shares of New Common Stock representing approximately 17.24% of the aggregate economic equity interests in Reorganized Magellan for an aggregate purchase price of $75,000,000. All holders of Class 7 claims who elect to exercise Subscription Rights are referred to as “Participating Other Holders.” The Investor shall purchase MVS Securities representing the economic equity interest attributable to the New Common Stock offered to , but not purchased by, holders of Class 7 claims. The Subscription Rights shall only be exercisable by the Participating Other Holders by payment in full in cash by the Effective Date.

TREATMENT OF SENIOR NOTES:		The Holders of Allowed Senior Note Claims will receive New Senior Notes on account of such Claims in an aggregate principal amount equal to the principal amount of the Senior Notes. Accrued and unpaid pre- and post-petition interest through the Effective Date (whether or not any post-petition interest is allowed by the Bankruptcy Court) will be paid either in cash or additional New Senior Notes, at the option of Magellan. From the interest payment immediately preceding the Commencement Date through the Effective Date, the interest due on the Senior Notes shall be a combined rate of interest of 10 3/8%. The New Senior Notes shall (a) bear interest at the rate of 9 3/8% per annum, payable on the same date as interest is to be paid on the Existing Senior Notes; (b) have a maturity date of November 2008; (c) not be contractually subordinated to any other debts or claims; and (d) otherwise have substantially the same terms as the existing Senior Note Indenture with such modifications as may be necessary to accommodate new bank financing. Magellan will not have the option to make a payment in kind (i.e., issuance of additional New Senior Notes) in lieu of a scheduled interest payment. The foregoing treatment of the Senior Note Claims is subject to the

		approval of the holders of allowed Class 1 claims and Magellan and the Investor shall exert their best efforts to obtain such consent.

USE OF PROCEEDS:		The Modified Plan shall provide that (a) if the holders of allowed Class 1 claims who have executed lock-up agreements applicable to the March 26, 2003, plan of reorganization consent to the treatment of Senior Note claims outlined above, $50 million of the proceeds of the sale of the MVS Securities shall be used to make a cash payment to holders of allowed secured claims classified in Class 1 to reduce the principal amount the New Senior Secured Obligations to be issued under the Plan by the amount of the cash payment; (b) if the holders of allowed Class 1 claims who have executed lock-up agreements applicable to the March 26, 2003, plan of reorganization do not consent to the treatment of Senior Note claims outlined above, $50 million of the proceeds of the Investment shall be used to reduce the amount of New Senior Notes to be issued pursuant to the Modified Plan by the amount of each payment; and (c) the remainder of the proceeds shall be used for general working capital purposes.

PLAN OF REORGANIZATION:		The Investor’s obligation to purchase the MVS Securities pursuant to the terms hereof shall be contingent upon the confirmation and consummation of the Modified Plan, which shall be substantially on the terms set forth in Plan Terms (as defined herein), without amendment that is adverse to the Investor.

REPRESENTATIONS AND WARRANTIES:		The final documents shall contain representations and warranties customary for a transaction and issuer of this nature and reasonably satisfactory to the Investor, Magellan and the Official Committee.

BOARD REPRESENTATION:		The number of directors on Reorganized Magellan’s Board of Directors shall be fixed at seven (7). For purposes of the composition of Reorganized Magellan’s initial Board of Directors: (A) five (5) of the board members (the “Investor Directors”) shall initially be designated by the Investor (two of whom shall be members of management of Reorganized Magellan and at least one of whom shall qualify as an independent director); and (B) two (2) additional board members having three (3) year terms (separate and apart from the Investor Directors) (each, a “Consent Director”) initially shall be selected by the Committee of which one shall qualify as an independent director, both of which shall be subject to the consent of the Investor, which consent shall not be unreasonably withheld.

		For purposes of selecting Consent Directors, the Committee shall be defined as the Official Committee of Unsecured Creditors (the “Official Committee”) appointed in the Chapter 11 Cases.

		On and after the Effective Date, Reorganized Magellan’s charter and by-laws, as amended pursuant to this Term Sheet, shall provide that the holders of the MVS Securities shall (i) vote as a separate class to elect three (3) members of Reorganized Magellan’s board of directors until the MVS Securities represent less than the Minimum Hold and (ii) vote together with the holders of the New Common Stock to elect two (2) members of Reorganized Magellan’s board of directors. Until the MVS Securities represent less than the Minimum Hold, the holders of the MVS Securities shall be entitled to cast a number of votes equal to the aggregate number of shares of New Common Stock outstanding at the time of any vote. Two (2) members of Reorganized Magellan’s Board of Directors shall be elected by the holders of New Common Stock voting as a separate class. After all of the MVS Securities are converted into New Common Stock, all common shareholders shall have the right to vote together to elect all members of the board of directors in accordance with applicable law.

		All affiliated party transactions between Reorganized Magellan and the Investor or any of its affiliates must be approved by either (i) a majority of the members of Reorganized Magellan’s Board of Directors elected by the holders of New Common Stock, voting as a separate class, or (ii) holders of a majority of the New Common Stock, voting as a separate class.

REGISTRATION RIGHTS:		Reorganized Magellan shall enter into a registration rights agreement with the Investor on terms satisfactory to the Investor.

CONDITIONS PRECEDENT:		The obligations of the Investor to make the Investment will be subject to the following conditions precedent:

		(a) the Modified Plan shall be in form and substance materially consistent with the Plan of Reorganization of Magellan and its subsidiaries filed on March 26, 2003 (with such changes as required to incorporate the terms of this Amended Term Sheet, the “Plan Terms”) and shall be reasonably satisfactory to the Investor. The Modified Plan shall include a provision permitting the Investor to offer holders of allowed Class 7 claims an opportunity to tender a portion of the shares of New Common Stock such holders are otherwise entitled to receive in respect of their claims

		up to a maximum of $50 million to the Investor at a price determined based upon a pre-investment total equity value of $225 million. Holders of allowed Class 7 claims that make such an election shall be required to do so no later than the last day for the receipt of ballots accepting or rejecting the Modified Plan, all such elections shall be irrevocable. Shares purchased pursuant to this paragraph shall be issued in the form of MVS Securities instead of New Common Stock.

		(b) an order confirming the Modified Plan (the “Confirmation Order”), in form and substance reasonably satisfactory to the Investor, shall have been entered and shall be in full force and effect;

		(c) there shall not have occurred any material adverse change in the business, condition (financial or otherwise), operations, performance or properties of Magellan and its direct or indirect subsidiaries, taken as whole, since September 30, 2002; provided, however, that (a) any change reflected in Magellan’s 10-Q filings for the fiscal quarters ended December 31, 2002 or March 31, 2003 or any other information disclosed to the Investor (or known to the Investor) on the date hereof, and (b) the filing of these Chapter 11 Cases or the consummation of the Modified Plan shall not be deemed a material adverse change;

		(d) execution and delivery of appropriate legal documentation in form and substance reasonably satisfactory to the Investor and the satisfaction of the conditions precedent contained therein which conditions precedent shall not vary materially from the conditions precedent set forth herein;

		(e) adoption of a corporate charter and bylaws for Reorganized Magellan consistent with the terms contained herein and in form and substance reasonably satisfactory to the Investor;

		(f) all necessary governmental, regulatory and third party approvals, waivers and/or consents in connection with the Investment shall have been obtained and remain in full force and effect, and there shall exist no claim, action, suit or proceeding, pending in any court or before any governmental instrumentality, which would restrict the making of the Investment;

		(g) as of the end of the month prior to the Effective Date, Magellan realizes revenues and EBITDA for the period from January 1, 2003 through the end of such month that are no less than 85% of the projected revenues and EBITDA set forth in Magellan’s business plan for fiscal year 2003, in the form attached hereto as Exhibit “B,” and Magellan shall provide the Investor on the business day immediately preceding the Effective Date, a statement, which shall be executed by the President and Chief Executive Officer and Chief Financial Officer of the Company, which shall set forth the actual revenues and EBITDA for the measurement period;

		(h) cash in hand or borrowing availability as of the Effective Date, after giving effect to $47.5 million of the proceeds of the Investment but taking into account distributions under the Plan (other than the cash payments used to reduce the New Senior Notes or any payment to pay cash in lieu of issuing New Common Stock as set forth in paragraph (a) above in this section “Conditions Precedent”), of at least $20 million, and Magellan shall provide the Investor on the business day immediately preceding the Effective Date a certificate, executed by the President and Chief Executive Officer and the Chief Financial Officer of the Company, confirming that the Company projects that it will have cash (or cash equivalents) and/or availability under a revolving or similar credit facility during the period commencing on the Effective Date and continuing for 18 months thereafter in an amount of no less than $20 million;

		(i) total fees and expenses incurred from and after May 1, 2003, of the legal advisors to Magellan, the Official Committee and the existing senior secured lenders’ agent related to the Chapter 11 Cases, Healthcare Partners, Inc., Houlihan Lokey, Alvarez & Marsal, Gleacher Partners, LLC and Kekst (such fees and expenses shall specifically exclude the success fee payable to Houlihan Lokey, and any fees payable in respect of any exit financing) shall not exceed $25 million;

		(j) either the New Facilities (as defined in the Plan) shall have closed on substantially the terms set forth herein and on the Plan Terms and shall be in full force and effect or the Senior Secured Credit Agreement shall be paid in full in cash with the proceeds of an exit facility, the terms of

		which are as or more favorable to Reorganized Magellan as the New Facilities; and

		(k) the New Aetna Note and the Aetna Purchase Option (each as defined in the Plan of Reorganization) shall have been executed on substantially the terms set forth in the Plan Terms and shall be in full force and effect.

TERMINATION EVENTS:		“Termination Event” wherever used herein, means any of the following events (whatever the reason for such Termination Event and whether it will he voluntary or involuntary):

		(a) Magellan has not filed the Modified Plan on or before July 10, 2003;

		(b) Magellan has not filed a disclosure statement relating to the Modified Plan (the “Disclosure Statement”) on or before July 10, 2003;

		(c) Intentionally omitted;

		(d) the Bankruptcy Court has not entered an order approving the Amended Commitment Letter and this Amended Term Sheet and authorizing and directing Magellan to perform all of its obligations under the Amended Commitment Letter and hereunder on or before July 10, 2003;

		(e) Magellan does not obtain Bankruptcy Court approval of the Disclosure Statement on or before September 15, 2003;

		(f) the Bankruptcy Court does not confirm the Modified Plan on or before November 15, 2003;

		(g) the Effective Date of the Modified Plan does not occur on or before December 15, 2003;

		(h) a trustee, responsible officer, or an examiner with powers beyond the duty to investigate and report, as set forth in subclauses (3) and (4) of clause (a) of section 1106 of the Bankruptcy Code shall have been appointed under section 1104 or 105 of the Bankruptcy Code for service in the Chapter 11 Cases;

		(i) the Chapter 11 Cases shall have been converted to cases under chapter 7 of the Bankruptcy Code;

		(j) Magellan shall have breached any material provision of the Commitment Letter or this Term Sheet;

		(k) the failure or nonoccurrence of any condition precedent in the Commitment Letter or this Term Sheet;

		(l) the Modified Plan provides or is modified to provide for any terms that are materially adverse to the Investor or are materially inconsistent with the terms set forth in this Term Sheet; and,

		(m) after filing the Modified Plan, Magellan (i) submits an additional or further amended plan of reorganization or liquidation that is materially adverse to the Investor or are materially inconsistent with the terms and provisions of this Term Sheet or (ii) moves to withdraw or withdraws the Modified Plan.

		The foregoing Termination Events are intended solely for the benefit of the Investor.

		All provisions of the Commitment Letter and this Term Sheet shall terminate automatically without the act of any party to the Commitment Letter upon the occurrence of any of the Termination Events, unless (x) the occurrence of such Termination Event is waived in writing within five (5) business days of its occurrence by the Investor; or (y) the Termination Event that has occurred is that set forth under subparagraph j. above, in which case termination is effective upon (A) written notice being provided to Magellan by the Investor that (1) Magellan has breached a material provision of the Commitment Letter or this Term Sheet and (2) sets forth the provisions of the Commitment Letter and/or this Term Sheet that have been breached; provided that Magellan hereby agrees to waive the requirement (if any) that the automatic stay in effect pursuant to section 362 of the Bankruptcy Code (the “Automatic Stay”) be lifted in connection with giving such notice (and not to object to the Investor seeking to lift the Automatic Stay in connection with giving such notice, if necessary), and (B) a ten (10) day cure period with respect to such breach must have occurred and such breach must remain uncured.

FEES AND EXPENSES:		Magellan shall reimburse the Investors for all reasonable and documented out-of-pocket expenses incurred by the Investor after February 14, 2003 directly related to the negotiation, preparation, execution and delivery of the Commitment Letter, the Amended

		Commitment Letter, the Term Sheet, and the Amended Term Sheet with respect to the Investment and any and all definitive documentation or other acts relating hereto or thereto, including, but not limited to, the actual reasonable fees and expenses of counsel, accountants and/or consultants to the Investors and the fees and expenses incurred by the Investor in connection with any due diligence (including fees and expenses payable to consultants); provided that such expenses shall not exceed $1,000,000, plus any expenses incurred in connection with obtaining the necessary state regulatory approvals in connection with the Investment.

		A Closing Fee in an amount equal to 1.75% of the aggregate purchase price of the Investment (i.e., the actual cash amount invested by the Investor) payable solely upon the closing of the Investment.

		The Break-Up Fee in an amount equal to $4,000,000 in the event that the Debtors consummate, on or before June 30, 2004, an equity investment with another party; provided, however that the Break-Up Fee shall not be payable if Investor breaches any of its obligations hereunder or under the Commitment Letter.

GOVERNING LAW:		All documentation in connection with the Investment shall be governed by the laws of the State of New York.

ASSIGNMENT:		The Investor may not assign its right to purchase the MVS Securities without the consent of Magellan.

AMENDMENT:		No amendment of the Commitment Letter or this Term Sheet shall be effective without the prior written consent of the Investor and Magellan.

Exhibit 99.2

HOLD FOR RELEASE	Investor Contacts:	Melissa Rose
		410-953-1218

		Bill Forrest
		Gleacher Partners, LLC
		212-418-4200

	Media Contact:	Erin Somers
		410-953-2405

MAGELLAN HEALTH SERVICES SECURES
IMPROVED EQUITY INVESTMENT COMMITMENT

– Revised Onex Commitment Based on $285 Million Pre-Money Equity Value of Magellan –

COLUMBIA, Md. – June 30, 2003 – Magellan Health Services, Inc. (OCBB: MGLH) today announced that the terms of its equity investment commitment agreement with Onex Corporation have been revised to increase the price to be paid by Onex to a price that is based on a pre-money equity valuation of $285 million (C$385 million), compared with $185 million (C$250 million) under the original Onex commitment. The terms were revised after Magellan received competing interest concerning an equity investment commitment. As under the original Onex commitment, the revised commitment provides for Magellan to receive an equity investment of $150 million upon consummation of its Chapter 11 reorganization.

The revised Onex equity commitment has the support of the Official Committee of Unsecured Creditors appointed in its Chapter 11 case, and Magellan stated that it continues to believe that it will emerge from Chapter 11 in September 2003.

Steven J. Shulman, chief executive officer of Magellan Health Services, stated, “Our higher equity value is great news for our customers, providers, employees and creditors, because it means that serious investors are demonstrating increasing interest in Magellan’s future.”

“I am very pleased that Onex remains committed to its investment. I again thank Magellan’s customers and providers for their loyalty and our employees for their dedication,” Mr. Shulman concluded.

Robert LeBlanc, managing director of Onex Corporation, stated, “We have confidence in Magellan’s market, its current and potential performance, and its management team, and we are pleased to reaffirm our partnership with Magellan through this equity investment commitment.”

“The Chapter 11 process has successfully enhanced the prospective strength and value of reorganized Magellan,” said Saul E. Burian, director of Houlihan Lokey Howard & Zukin, which is the financial advisor to the Official Committee of Unsecured Creditors. “Magellan’s attractive business and its equity investment

- more -

commitment give us great confidence in its ability to perform according to its plans and achieve its potential when it exits Chapter 11.”

The complete terms of the revised equity investment commitment will be filed with the U.S. Bankruptcy Court for the Southern District of New York Bankruptcy Court, and will be incorporated into a forthcoming amended Plan of Reorganization (the “Plan”) and Disclosure Statement.

The revised investment commitment retains substantially the same components as the original commitment, with the following exceptions:

• The rights offering to be made available to the Company’s general unsecured creditors, including holders of note claims, has been increased to $75 million of new equity in reorganized Magellan, or approximately 17.2%, compared with $50 million, or approximately 14.9% of the new equity in reorganized Magellan. As under the original Onex commitment, Onex has agreed to purchase all such equity that is not purchased by the Company’s general unsecured creditors and holders of note claims. (As a result of the expansion of the rights offering, the remainder of Onex’s $150 million commitment will be a $75 million direct investment in exchange for 17.2% of the new equity in reorganized Magellan, compared with $100 million in exchange for 29.9%);

• For holders of unsecured claims who elect the Cash Option (please see the attachment to this press release for an explanation of the Cash Option), the price that Onex has committed to pay will be based on a pre-money equity valuation of reorganized Magellan of $225 million, compared with $150 million under the original commitment;

• The cash payment of up to $50 million to holders of unsecured claims who elect the Cash Option will be funded entirely by Onex, and if the Cash Option is fully subscribed Onex would acquire from participants in the Cash Option an additional 14.6% of the new equity in reorganized Magellan; and

• The two directors of reorganized Magellan’s initial seven member board that are to be designated by the official creditors committee shall have initial terms of three years.

Summary terms of the revised equity investment commitment are attached to this press release.

The Onex commitment is subject to certain conditions as set forth in the commitment letter, including approval by the Bankruptcy Court having jurisdiction over Magellan’s Chapter 11 case. The implementation of the investment by Onex and the effectiveness of Magellan’s restructuring are conditioned on confirmation and consummation of the Plan in accordance with the U.S. Bankruptcy Code.

Gleacher Partners LLC is serving as financial advisor to Magellan Health Services, and Weil, Gotshal & Manges LLP is bankruptcy counsel to Magellan Health Services.

About Magellan: Headquartered in Columbia, Md., Magellan Health Services (OCBB: MGLH), is the country’s leading behavioral managed care organization, with approximately 65 million covered lives. Its customers include health plans, corporations and government agencies.

Safe Harbor Statement: Certain of the statements made in this document including the success of any restructuring constitute forward looking statements contemplated under the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to known and unknown uncertainties and

risks which could cause actual results to differ materially from those contemplated or implied by such forward looking statements including: the ability of the Company to obtain the consent of the Bankruptcy Court for the transactions referred to above, the ability to obtain the acceptances from its creditors necessary to consummate the proposed restructuring, the Company’s obtaining Bankruptcy Court approval of a disclosure statement related to the Plan of Reorganization and any other needed approvals, and confirmation and consummation of the Proposed Plan of Reorganization, service issues arising with certain customers, terminations by customers, operating results or cash flows differing from those contemplated or implied by such forward looking statements, the impact of new or amended laws or regulations, governmental inquiries, outcome of ongoing litigation, interest rate increases, unanticipated increases in the costs of care and other factors. Any forward looking statements made in this document are also qualified in their entirety by these risks and the complete discussion of risks set forth under the caption “Cautionary Statements” in Magellan’s Annual Report on Form 10-K/A for the year ended September 30, 2002 filed with the Securities and Exchange Commission on January 23, 2003.

# # #

(Summary terms of revised equity investment commitment follows.)

Summary Terms of the Revised Onex Equity Commitment

The revised Onex equity commitment contains three principal components. First, Onex has agreed to purchase $75 million of equity of reorganized Magellan to the extent such equity is not purchased by the Company’s general unsecured creditors, including holders of note claims, who will be offered the right to purchase such equity by the Company under the Plan. The equity issued pursuant to this rights offering will equal approximately 17.2% of the equity of reorganized Magellan. Second, Onex will invest $75 million in reorganized Magellan in exchange for new equity that also will represent approximately 17.2% of the outstanding common equity of reorganized Magellan.

Under the third component of the Onex commitment, the Plan will be amended to provide holders of unsecured claims the opportunity to elect to receive cash in lieu of a portion of the shares of reorganized Magellan that they would otherwise be entitled to receive under the Plan, up to a maximum of $50 million for the class (the “Cash Option”). Those holders who elect the Cash Option will receive their pro rata share of up to $50 million in cash, which will reduce their distribution of common stock in reorganized Magellan by a number of shares that is equal in value to the cash received, based upon an equity valuation of reorganized Magellan of $225 million. This cash payment of up to $50 million will be funded by Onex, and if the Cash Option is fully subscribed, Onex would acquire from participants in the Cash Option an additional 14.6% of the new equity in reorganized Magellan.

Of the total investment of $150 million in the Company, the Company will use approximately $50 million to $75 million to reduce debt. The proceeds of the $150 million equity investment not used to reduce debt will be available to the Company for general corporate purposes.

If creditors elect to receive $50 million in cash under the Cash Option and no creditors elect to participate in the rights offering, Onex would make a total equity investment of $200 million in the equity of reorganized Magellan and own approximately 49% of the new equity in reorganized Magellan. If no creditors elect the Cash Option and creditors participate fully in the rights offering by investing $75 million in the Company, Onex’s total investment would be $75 million and it would own approximately 17.2% of the new equity in reorganized Magellan.

The equity Onex acquires initially will have 50% of the voting rights with respect to matters to be voted on by common equity holders. The board of directors of Reorganized Magellan will consist of seven members, five to be designated by Onex and two to be designated by the official creditors committee (which two will have initial terms of three years). Thereafter, Onex will have the right to elect three of the seven directors of reorganized Magellan, all common equity holders voting together will have the right to elect two directors (with Onex having 50% of the vote) and all common equity holders other than Onex will have the right to elect two directors (after the expiration of the three-year term of the two directors designated by the creditors committee). Onex’s voting rights will not be transferable upon the sale of any of its shares, and Onex will be subject to certain minimum equity ownership thresholds and mandatory conversion triggers, as detailed in the commitment letter.

Delaware	1-6639	58-1076937
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6950 Columbia Gateway Drive Suite 400 Columbia, Maryland		21046
(Address of Principal Executive Offices)		(Zip Code)

Item 7.	Financial Statements and Exhibits.

(a)	Financial Statements of business acquired: Not applicable

(b)	Pro forma financial information: Not applicable

(c)	Exhibits:

Exhibit No.		Description of Exhibit

99.1		Commitment letter agreeement between Magellan Health Services, Inc. and Onex Corporation dated June 25, 2003.

99.2		Press Release issued June 30, 2003 by Magellan Health Services, Inc.

	MAGELLAN HEALTH SERVICES, INC.

	By:	/s/ Mark S. Demilio
		Mark S. Demilio
		Executive Vice President and
		Chief Financial Officer


Date: July 3, 2003