Magazine article American Banker

Conseco Says Talk of Its Debt Picture Misses the Picture

Magazine article American Banker

Conseco Says Talk of Its Debt Picture Misses the Picture

Article excerpt

Conseco Inc. Thursday said short-sellers are spreading misleading information about its debt situation.

The company would not say what the misinformation was. But in a statement the Carmel, Ind., company told investors to consult sections of its latest 10-Q filing with the Securities and Exchange Commission.

Those sections say the company is optimistic that it will be able to extend the maturities on $1.4 billion of debt that is scheduled to come due Sept. 30, and sell or restructure its troubled lending unit, Conseco Finance Corp., formerly Green Tree Financial Corp.

A spokesman said the rumors were being spread mostly by word of mouth.

Conseco acknowledges in its 10-Q that "because of the time required to complete the sale of assets and other contemplated activities, extension of the company's bank credit facilities will be required if the company is to meet its September debt maturities."

The filing also says that the company remains optimistic that extensions can be negotiated, but offers no assurances that it will be successful.

Included in the $1.4 billion is $570.2 million in bank loans to approximately 170 directors, officers, and employees. Employees used the loans, which Conseco originally guaranteed, to purchase shares of the company. Of the $570.2 million, $144.4 million will mature on Sept. 1 and $425.8 million will come due on Aug. 30, 2001.

The problem is that as of June 30 the bank loans exceeded the value of the stock collateralizing the loans by $385. …

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