Conseco Inc. (CNO) said Wednesday that Paulson & Co. will
purchase up to $200 million of the $293 million of convertible
notes the struggling insurer is selling, on top of the hedge fund
manager's plan to purchase $77.9 million worth of stock and
warrants.
That would give Paulson a 9.9% stake in Conseco. Each $1,000 of
the notes will be convertible into 182.1494 shares, or $5.49 each.
Conseco has about 185 million shares outstanding.
Shares were up 24% premarket to $6.19 amid the capital-raising
efforts, intended to shore up Conseco's balance sheet.
Conseco said Tuesday that the seven-year convertible notes will
carry a 7% coupon. They won't be convertible prior to June 2013.
The notes are being sold through a private placement.
John Paulson is famous for betting against subprime mortgages
and financials in 2007 and some of 2008, making him one of the
richest and most successful hedge fund managers in the world.
However, Paulson this year turned bullish on at least some
financials, buying several, including shares of Bank of America
Corp. (BAC) and Regions Financial Corp. (RF) during the second
quarter. The move was seen by many as a bullish turn on the sector,
and news of the purchases sparked a rally in the shares.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354; kevin.kingsbury@dowjones.com