Conseco Raises Nearly $223 Million From Public Offering of Stock

Copyright 2009 A.M. Best Company, Inc.All Rights Reserved BestWire

December 28, 2009 Monday 01:30 PM EST

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Conseco Raises Nearly $223 Million From Public Offering of Stock

Fran Lysiak

CARMEL, Ind.

Conseco Inc. has raised about $222.7 million, after underwriting commissions and expenses, from its recently completed public offering of common stock.

The Indiana-based life, Medicare supplemental and long-term care insurer said it used about $161.4 million of the net proceeds to reduce its debt under its senior credit agreement. Conseco said it will use the rest of the money for general corporate purposes.

With the offering, Conseco (NYSE: CNO) issued and sold 49.5 million shares of its stock at a price of $4.75 a share. Morgan Stanley & Co. was bookrunning manager and Credit Suisse Securities (USA), FBR Capital Markets & Co. and Macquarie Capital (USA) acted as co-managers.

Attempts to speak with Conseco weren't immediately successful.

Earlier this month, the company completed an amendment to its senior credit facility that includes modifying its principal repayment schedule to eliminate any payments in 2010 (BestWire, Dec. 9. 2009).

In October, Conseco said it agreed to sell $78 million of its common stock and warrants to Paulson & Co., a large hedge fund firm, to strengthen its capital position. At the close of the deal, the investment firm owned nearly 10% of Conseco's outstanding shares, including shares the firm previously bought in the open market (BestWire, Oct. 19, 2009).

In October, A.M. Best commented that it "believes that these offerings will enhance the organization's overall financial flexibility, while providing additional cushion with respect to certain covenants in Conseco's senior secured credit facility."

Back in March, the insurer said it was seeking to amend the $911.8 million senior secured credit agreement to allow for changes or waivers of financial covenants, and increase in the interest rate that it would pay (BestWire, March 27, 2009).

Conseco Insurance Co. currently has a Best's Financial Strength Rating of B (Fair).

On the early afternoon of Dec. 28, Conseco's stock was trading at $5.07 a share, down 0.39% from the previous close.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])

December 29, 2009

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