<font color=green>Conseco `Restoration Plan' Moves Forward; Company and Banks
9/22/0 18:5 (New York)
Close on Debt Restructuring; Debt to Be Cut by
$3 Billion Over 3 Years
Business Editors
INDIANAPOLIS--(BUSINESS WIRE)--Sept. 22, 2000--Conseco, Inc.
(NYSE:CNC) today announced that its lender banks have signed
amendments that will restructure the company's credit facilities.
The restructuring of this debt is a key component of the
"Restoration Plan" initiated by Gary C. Wendt after he joined Conseco
on June 29 as Chairman and CEO.
The agreement with the banks covers $2.8 billion of debt held by a
25-bank consortium led by Bank of America and Chase Manhattan Bank.
Wendt called the terms of the debt restructuring important news,
but said, "the larger story here -- what we call the Conseco
Restoration Plan -- is the complete re-engineering of the company's
financial structure. We are executing a plan that provides long term
stability and flexibility for our capital structure."
Over the past four years, Conseco's bank and public debt had
increased to approximately $5.9 billion. The Restoration Plan calls
for reducing the company's debt by more than $3 billion by year-end
2003, reducing Conseco's debt from 41% of total capital to less than
25%. More importantly, the Restoration Plan allows Conseco to meet its
debt obligations and improve its capital structure dramatically
without impacting its core businesses.
The beginning elements of the Conseco Restoration Plan center
around two initiatives: (1) selling non-strategic assets of the
company, and (2) restructuring the operations of Conseco Finance.
These initiatives to generate cash were implemented by Wendt soon
after his arrival at Conseco; they have proceeded ahead of schedule.
Over the next three years, these two cash-generating components of
the Restoration Plan are designed to enable Conseco to repay
$1.52 billion in bank debt and $1.56 billion in public debt.
To begin the debt reduction program the company has identified
more than $2 billion in assets to be sold or monetized. More than
$700 million of proceeds from these activities have already been
realized; total proceeds are expected to exceed $1 billion by year-end
2000.
The initial stages of the restructuring of Conseco Finance
operations were announced on July 27. That plan, designed to assure
stable growth, included the lay-off of 2000 employees and over
$150 million in annual expense reductions.
Major elements of the Restoration Plan, including terms of the
bank debt restructuring, include:
-- Payment of $650 million in bank debt on September 22, 2000;
-- Payment of 2001 and 2002 public debt as scheduled
($131 million in December 2000 and $668 million in June 2001);
-- Extension of $571 million of bank debt to December 31, 2001
funded by the sale of non-strategic assets;
-- Payment of 2003 and 2004 public debt as scheduled
($450 million in October 2002 and $310 million in
February 2003);
-- On $1.5 billion of bank debt previously due September 2003,
payments of $150 million in each of 2002 and 2003, with an
option to extend the remaining $1.2 billion to 2005;
-- Extension to December 2003 of the $570 million of loans and
related Conseco guarantees comprising the Conseco directors
and officers stock purchase program (to qualify for the loan
and guarantee extensions, borrowers will be required to enter
into a revised lending program, which will be finalized in the
4th quarter);
-- Suspension of the dividend on Conseco common stock beginning
in the current quarter (providing approximately $18 million
per quarter toward the financial restructuring);
Wendt said that winning back top-drawer insurance and debt ratings
would be the next step in the Restoration Plan. "With a stable and
flexible financial structure in place, we can turn our full attention
to building consistently profitable business operations." |
