(Updates with Paulson & Co. comment.)
DOW JONES NEWSWIRES
Conseco Inc. (CNO) plans to sell stock and debentures in an
effort to shore up its beleaguered balance sheet.
The company moved quickly to issue the securities, even winning
a New York Stock Exchange exception, as delaying the offerings to
get stockholder approval would "seriously jeopardize the financial
viability" of the company.
Conseco's shares rose 14% to $5.69 in after-hours trading. The
stock has doubled in the past year.
The insurance holding company said it would register with the
Securities and Exchange Commission to sell at least $200 million in
shares in a public offering and also agreed to sell 16.4 million
shares and warrants to purchase five million shares privately to
investment funds managed by Paulson & Co. for $77.9 million.
The warrants will have an exercise price of $6.50.
Additionally, Conseco said it plans to sell, in a private offer,
up to $293 million in aggregate principal 2016 7% convertible
senior debentures. The new debentures mostly won't be convertible
prior to June 30, 2013.
Following the closing of the private sale of common stock,
Paulson will hold a roughly 9.9% stake, including shares previously
acquired in open-market transactions. Half of the net proceeds from
the issuance of those shares will be used to repay debt under
Conseco's credit agreement.
"We believe Conseco has a sound business model and with this
financing, a much improved financial position," said John Paulson
of Paulson & Co. "We have great confidence in Conseco's future
direction, in [CEO] Jim Prieur, his management team and the board
of directors."
Last quarter, the Indiana-based company swung to a profit as its
investment losses shrank from a year earlier, having emerged from a
tumultuous period in which it amended a credit pact after its
auditor expressed doubts it could continue as a going concern.
-By Kathy Shwiff and John Kell, Dow Jones Newswires;
212-416-2357; Kathy.Shwiff@dowjones.com