A.M. Best Assigns Rating to Conseco Convertible Exchangeable Preferred Stock.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 3, 2003 A.M. Best Co. has assigned a "ccc" rating to Conseco Inc's (Carmel, IN) (NYSE NYSE See: New York Stock Exchange :CNO CNO abbr. chief of naval operations ) $860 million convertible exchangeable preferred stock Convertible exchangeable preferred stock Convertible preferred stock that may be exchanged, at the issuer's option, into convertible bonds that have the same conversion features as the convertible preferred stock. . The financial strength rating of B (Fair) for Conseco, Inc's insurance subsidiaries remains unaffected. The outlook for all Conseco's ratings, including this debt assignment, is positive. The preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. was issued as a result of a Chapter 11 bankruptcy reorganization plan A scheme authorized by federal law and promulgated by the president whereby he or she alters the structure of federal agencies to promote government efficiency and economy through a transfer, consolidation, coordination, authorization, or abolition of functions. which became effective on September 10, 2003. In addition to the preferred stock, Conseco's new capital structure consists of a $1.3 billion secured bank credit facility, approximately 100 million shares of common stock and warrants to purchase 6 million shares of common stock at an exercise price of $27.60 per share. The preferred stock is convertible after September 30, 2005 into shares of Conseco common stock, or exchangeable after September 10, 2013 into shares of Conseco common stock. It pays a 10.5% coupon until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 10, 2005, and 11% thereafter, which is payable in additional shares of preferred stock. The stock may be payable in cash, at Conseco's option, once certain specified conditions have been met. The bank credit facility, which consists of two tranches and pays interest at specified percentages above LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). , contains certain covenants whose breach could place Conseco in technical default. The initial "ccc" rating on the preferred stock reflects Conseco's modestly high debt to capital ratio; current low interest coverage; weak though improving capitalization levels and the stock's highly subordinated position within the capital structure; and the regulatory restrictions currently in place. These restrictions require prior 30 day approval of the Texas Dept of Insurance for Conseco's insurance subsidiaries to make ordinary dividend payments upstream to the holding company to service the bank credit facility. The assignment of a positive outlook to Conseco's ratings reflects A.M. Best's favorable view of Conseco's bankruptcy reorganization and a number of management initiatives, including, the sale of the G.M. building, restructuring of Conseco's investment portfolios, expense reductions, merging of certain subsidiaries, stabilization of surrenders and a commitment in the near- to medium-term to focus on selling higher margin products with lower capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . The following debt rating has been assigned: Conseco Inc -- -- "ccc" rating on $860 million 10.5% convertible exchangeable preferred stock For a list of A.M. Best's debt ratings, please visit: http://www.ambest.com/ratings/debtrating/companies.html. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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