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Non-Tech : Conseco Insurance (CNO) -- Ignore unavailable to you. Want to Upgrade?

To: Tunica Albuginea who wrote (2405)	8/16/2000 12:08:53 AM
From: Jack Hartmann	Respond to of 4155

Lehman Is Latest Hurdle For Conseco's Recovery By ALLISON BISBEY COLTER Of DOW JONES NEWSWIRES (This report was originally published late Monday.) NEW YORK -- Conseco Inc. (CNC) has encountered a new hurdle on the road to financial recovery: its own investment banker. The insurance company, which is scrambling to repay $1.4 billion of holding debt due Sept. 30, may not be able to use proceeds from the sale of some of assets before next year due to restrictions placed by Lehman Brothers Holdings Inc. (LEH) on the transfer of money between Conseco and its subprime lending unit, Conseco Finance. In a filing with the Securities and Exchange Commission, Monday, Conseco said it's still negotiating with its lenders to extend the maturity of the debt. Last month, the company announced plans to sell certain non-strategic assets, such as its investment in wireless company Tritel Inc. (TTEL), its interest in a riverboat casino in Lawrenceberg, Ind., and its subprime auto loan and credit card portfolios, to pay off the debt. Conseco expects these sales will generate cash proceeds of about $2 billion over the next 12 to 15 months, but it may not realize the proceeds before Sept. 30. But even if the sale of the subprime business goes through, the proceeds won't be available to the parent company before next year under the terms of a new repurchase agreement Conseco Finance negotiated with Lehman in the second quarter, the company revealed in its filing with the SEC. In exchange for the ability to securitize additional types of assets, Conseco Finance refinanced the approximately $2.5 billion of debt it owes Conseco Inc. It paid down $450 million and replaced the balance with a one-year note. It also agreed not to pay dividends to its parent company until 2001, and only then in the event certain financial covenants are met. Conseco said in the filing it is negotiating with Lehman to modify the restrictions. In partial consideration for the transaction, Lehman received a warrant for 5% of Conseco Finance's common stock. It is exercisable at a nominal value. Conseco took a $48.1 million charge against second-quarter earnings to reflect the estimated value of the warrant. Conseco Finance also paid Lehman a $25 million transaction fee for the sale of $1.3 billion in receivables to the investment bank in May. Lehman also received $20 million in fees for its efforts to form an investor group to purchase Conseco Finance. Conseco paid other investment banks and financial institutions $24 million in advisory fees related to the potential sale of the subprime unit. Conseco has since decided to hold on to the bulk of the subprime unit's assets. -Allison Bisbey Colter; Dow Jones Newswires; 201-938-5298 allison.bisbey-colter@dowjones.com