On September 23, 2004 AIG Global Investment Group (AIGGIG), through affiliates of its member companies, committed $20 million of equity financing to affiliates of The Blackstone Group ("Blackstone"), a private equity firm, in connection with Blackstone's purchase of a majority equity interest in Vanguard Health Systems, Inc. ("Vanguard"). Vanguard, formed in 1997 by management and Morgan Stanley Capital Partners, owns and operates acute care hospitals and complementary healthcare facilities in Texas; Chicago, Illinois; Phoenix, Arizona; and Orange County, California. Since 1998, Vanguard has acquired or developed 16 acute care hospitals with a total of 3,784 beds. In addition, Vanguard owns a Medicaid managed health plan, Phoenix Health Plan, which serves approximately 95,000 members in Arizona; and a capitated health plan, MacNeal Health Providers, an Independent Practice Association covering certain physician and outpatient services for approximately 49,000 members in metropolitan Chicago, Illinois. As a result of the transaction, Vanguard has a new parent company, VHS Holdings LLC ("Holdings").

In connection with the transaction, management (along with certain other existing shareholders) and Morgan Stanley Capital Partners reinvested in Holdings, and collectively now own approximately a 34% equity interest. The transaction also included a $475 million term loan under Vanguard's new credit facility and the private placement of $575 million aggregate principal amount of 9% Senior Subordinated Notes due 2014 and $216 million aggregate principal amount at maturity ($124.7 million in gross proceeds) of 11-1/4% Senior Discount Notes due 2015.

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