<font color=red>Fitch Comments on Conseco's Bank Agreement; Rating Reviews
9/25/0 12:7 (New York)
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Business Editors
CHICAGO--(BUSINESS WIRE)--Sept. 25, 2000--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.
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