Reprint Letter from Gary Wendt to employees.
October 9, 2000 Yahoo#77785
Conseco Directors and Officers (including Subsidiary Officers)
Ladies and Gentlemen:
You’ve been receiving a lot of “information” on Conseco in recent
weeks.
Unfortunately, much of this “information” comes via “new technology”
(meaning its sources are hard to trace) and we can say, with a high
degree of confidence, that much is being generated by short sellers
who economically want Conseco to be in continual distress. But,
unfortunately this is the “way of the (new) world” of communication
and its affect on the stock market.
We last week refuted some of the inaccurate analysis, and may have
to do so again in the future although we find bringing ourselves
down to this level distasteful, at best.
Thus far you have not heard as much from me.
Do I share your disappointment in not moving up the stock price
after all we’ve done? You bet! As I disclosed to you after my
employment contract was filed with the SEC, I bet several tens of
millions of dollars that Conseco could be restored. While I have
found nothing in the first 100 days on the job that discourages me
from holding that conclusion, watching the stock price wallow lower
than it was when it was announced that I had accepted the job hardly
boosts my spirits!
Nonetheless, it is necessary for all of us - including me - to
recognize that restoring responsible stock value to Conseco is not
the business equivalent of a 100 yard dash. So, when discouraged by
the market’s reaction here’s what to do to feel much better: recall
what has already been accomplished - by this organization - in the
last 100 days.
The business model for Conseco Finance has been changed so that,
from September 1 forward, it will be a cash producer, not a cash
user.
Over $2 billion of non-strategic assets have been lined up to be
sold or monetized to reduce debt without in any way infringing on
our future income producing capabilities.
We have restructured the bank debt with options to extend through
2005 (!) if necessary (although there shouldn’t be any reason to
extend).
Our proposal - accepted by the banks - will reduce indebtedness (and
trust preferreds) of Conseco by over $3.5 billion over the next 3
years.
We have ready, if needed, an offer for a “reinsurance answer” to
restoring an A- rating from A.M. Best to our ratings sensitive
products.
But, we hope to regain the A- rating soon, without resorting to this
approach.
Last week we announced a new organization structure which should
streamline decision making, permit faster and more accurate
communication within all layers of the Company and provide for
renewed internal growth once we have recovered our A- rating.
What has happened in the last 3 months in Conseco is a series of
remarkable achievements for the organization. You will have the
chance to prove its strengths.
We will attempt to communicate more with you in the future with
information that permits you to be confident about Conseco’s future.
Very truly yours,
Gary C. Wendt |
