IBJNews

CNO stock hits 4-year high on recapitalization strategy

Back to TopCommentsE-mailPrintBookmark and Share

Stock in CNO Financial Group Inc. hit a four-year high Wednesday morning, a day after it announced it is seeking $950 million of loans and bonds to repay debt and reduce borrowing costs.

CNO shares gained 5.3 percent, to $9.43 each, in early trading, the highest intraday price since August 2008. They closed the day at $9.45, the highest close since July 2008. The firm’s shares have gained 50 percent this year.

“The deal should optimize the company’s debt leverage,” Randy Binner, an analyst at FBR Capital Markets, wrote in a research note Tuesday. “CNO is a compelling value play in our opinion with an in-progress capital management story.”

The Carmel-based insurer plans to obtain senior secured credit consisting of a $400 million, six-year term loan and a $250 million portion that matures in four years, CNO said Tuesday in a prepared statement. CNO also plans to sell $250 million of senior secured notes due in 2020 and is seeking a $50 million, three-year revolving credit line.

The insurance provider said the new term loans and bonds would be used, along with cash on hand, to pay off the $224 million outstanding under its senior secured credit agreement, plus notes for an estimated $657 million.

“Our strong balance sheet and free cash flow generation position us to take advantage of the favorable capital market conditions to reduce our cost of capital, increase our financial flexibility, and improve the debt maturity profile,” Ed Bonach, CEO of CNO, said in the statement.

The company, which counts John Paulson’s hedge fund as its largest investor, is planning to repurchase as much as $275 million of 9-percent notes due in 2018 for about $323 million, according to the statement. It will also redeem about $200 million of its 7-percent convertible senior debentures maturing in 2016 from affiliates of Paulson & Co. for about $334 million.

The transactions are expected to close late this month, CNO said.

ADVERTISEMENT

  • Clarification
    CNO is not a "life insurer". CNO is a holding company for 3 subsidiaries (Bankers Life and Casualty, Washington National and Colonial Penn) marketing long-term care, life and supplemental health insurance products.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

  4. The facts contained in your post make your position so much more credible than those based on sheer emotion. Thanks for enlightening us.

  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

ADVERTISEMENT