To: Jim Bishop who wrote (115719 ) 6/9/2003 5:57:09 PM From: Taki Respond to of 150070 CNCEQ oh.(COMTEX) B: Conseco says investor group ``hopelessly out of the money'' B: Conseco says investor group ``hopelessly out of the money'' Preferred investors, who include many retirees, are owed $2 billion, or about one-third of Conseco's debt. Along with common shareholders, preferred investors are expected to recover nothing because of their lower-tier status. INDIANAPOLIS, Jun 09, 2003 (AP WorldStream via COMTEX) -- A group of investors fighting Conseco Inc.'s bankruptcy reorganization plan is taking "potshots" at the proposal because the group is "hopelessly out of the money" when it comes to debt recovery, the company said in a court filing released Monday. Conseco, which in December became the third-largest U.S. company to file for bankruptcy, responded to the 19 objections filed since it presented its plan to emerge from bankruptcy as an insurance-only company with a lighter debt load. Conseco said it expects many objections will either be withdrawn or otherwise resolved before a federal bankruptcy judge in Chicago begins hearings Friday to confirm the plan. However, Conseco said several objections will remain unresolved, including those by holders of trust-preferred securities, the government trustee assigned to the case and the Securities and Exchange Commission. Those parties have objected to provisions releasing from liability Conseco officers, managers and directors who have been unable to repay loans from a $545 million company stock-purchase program dating to the late 1990s. The releases also grant insiders protection from legal claims stemming from business decisions that proved disastrous, including Conseco's 1998 purchase of Green Tree Financial Corp. That deal left Conseco with a foreclosure-riddled mobile home loan portfolio that began piling up debt. The loudest opposition to Conseco's reorganization plan has come from Conseco's holders of preferred securities, who rank below banks and bondholders in priority for debt repayment. Preferred investors, who include many retirees, are owed $2 billion, or about one-third of Conseco's debt. Along with common shareholders, preferred investors are expected to recover nothing because of their lower-tier status. Conseco said other investor groups such as banks and bondholders have largely embraced the reorganization plan. Balloting on the proposal was completed Friday, but vote results were still pending Monday. "It is easy, for parties such as the (preferred) committee, who are hopelessly out of the money, to second-guess the compromises reached and to take potshots at plan provisions," Conseco said. A key objection from preferred investors is that Conseco's reorganization plan undervalues the company's insurance operations at $3.8 billion. A greater valuation would leave more money to repay debt holders such as preferred investors. Conseco, based in the Indianapolis suburb of Carmel, said preferred investors would not be "in the money" unless the valuation is more than $4.8 billion. Preferred investors have retained their own experts who collectively assign the value at more than $5 billion. Conseco said its valuation - based on a study by an outside actuarial firm - "is reasonable, well-founded and accurate." A lawyer representing preferred investors, Irving Walker, said Monday the group "remains steadfast that there are serious, fatal problems with this plan." He reiterated the group's contention that it has standing to recover losses. Under Conseco's plan, about 40 percent of the debt holders' claims against the company would be converted into newly issued stock. Conseco, meanwhile, would reduce debt from $6.5 billion to $1.4 billion in hopes that its insurance operations could again become profitable. Its finance unit is being sold for about $1 billion, or about one-sixth of what Conseco paid for it. --- On the Net: Conseco: conseco.com By MARK JEWELL AP Business Writer Copyright 2003 Associated Press, All rights reserved -0- ProviderSequenceNumber: 1444 APO Priority=r (PROFILE (WS SL:BC-NA-FIN-COM--US-Conseco-Bankruptcy; CT:f; (REG:EURO;) (REG:BRIT;) (REG:SCAN;) (REG:ENGL;) (REG:ASIA;) (LANG:ENGLISH;)) ) KEYWORD: INDIANAPOLIS *** end of story ***