Sep 25, 2000 (BUSINESS WIRE) :Fitch Comments on Conseco's Bank Agreement
Rating Reviews Continue
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Fitch Comments on Conseco's Bank Agreement;
Rating Reviews Continue
BUSINESS WIRE - September 25, 2000 12:07
CHICAGO, Sep 25, 2000 (BUSINESS WIRE) -- Fitch, the international rating agency formed by the merger of Fitch IBCA and Duff & Phelps Credit Rating Co., has issued the following comment on Conseco, Inc. (Conseco) and its related entities.
On September 22, 2000, Conseco announced an agreement with its bank group that resolved the $1.4 billion of bank obligations that came due on September 22, 2000. The agreement is part of a broad restoration plan designed to re-engineer Conseco's financial structure.
This agreement removes a major uncertainty related to the company, which Fitch views as a favorable development. It also allows the company the ability to conduct asset sales in a more orderly fashion. With the favorable resolution of the bank maturity issue, Fitch is in the process of conducting a full analysis and evaluation of management's strategic initiatives, financial plans and timetable to determine if Fitch's current Conseco-related ratings and Rating Watch status should be retained or adjusted. Fitch's current ratings will remain in place until this process is completed.
Under the terms of the agreement, Conseco will pay $650 million in bank debt on Sept. 22, 2000, and will extend $571 million of bank debt to Dec. 31, 2001, to be funded by the sale of nonstrategic assets. Previously due September 2003, $1.5 billion of bank debt will be paid in payments of $150 million in each of 2002 and 2003, with an option to extend the remaining $1.2 billion to 2005. Scheduled public debt payments will be made in December 2000 ($131 million), June 2001 ($668 million), October 2002 ($450 million) and February 2003 ($310 million).
In addition, Conseco has extended $570 million of loans and related Conseco guarantees comprising the Conseco directors and officers stock purchase program to December 2003. 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 fourth quarter of 2000.
When the review is completed, the ratings for Conseco Finance will be assessed on a stand-alone basis, based on information contained in the loan documents. The impact of this delinking on the holding company and insurance company ratings, if any, will be assessed as part of the review.
Fitch's current ratings on Conseco and related entities are as follows. All ratings are on Rating Watch Negative.
Insurer Financial Strength --Bankers Life & Casualty Company, `BBB'; --Conseco Annuity Assurance Company, `BBB'; --Conseco Direct Life Insurance Company, `BBB'; --Conseco Health Company, `BBB'; --Conseco Life Insurance Company, `BBB'; --Conseco Life Insurance Company of New York, `BBB'; --Conseco Medical Insurance Company, `BBB'; --Conseco Senior Health Insurance Company, `BBB'; --Conseco Variable Insurance Company, `BBB'; --Manhattan National Life Insurance Company, `BBB'; --Pioneer Life Insurance Company, `BBB'.
Conseco Inc.:
--Senior Debt, `BB-';
--Preferred Stock, `B';
--Short-Term Rating, `B'.
Conseco Financing Trust I-VII:
--Preferred Securities, `B'.
Conseco Finance Corp.:
--Senior Debt, `B'.
Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides Structured Finance, Sovereigns and Public Finance Markets.
CONTACT: Conseco, Inc. Julie A. Burke, CPA, CFA, 312/368-3158, Chicago Peter F. Patrino, CFA, 312/368-3266, Chicago or Conseco Finance Brian P. Quinn, 312/368-5464, Chicago Thomas J. Abruzzo, 212/908-0793, New York or Media Relations James Jockle, 212/908-0547, New York
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