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Conseco to sell shares, bonds to shore up finances

J.K. Wall
October 13, 2009
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Conseco Inc. has secured a $78 million investment from a hedge fund, and will sell additional stock and bonds, in a bid to clear up the Carmel-based insurer's financial uncertainties.

Paulson & Co., a private investment firm based in New York, will acquire 16.4 million shares, with warrants to obtain another 5 million shares. Combined with shares Paulson already owns, Paulson will control 9.9 percent of the company.

Conseco plans to sell $200 million of common stock in a secondary offering and sell $293 million in new bonds. Conseco hopes to complete the transactions by March.

The moves will allow the Conseco to pay off $293 million in bonds that Conseco might have been forced to convert into cash in September 2010.

Conseco didn't have the cash for such an event, a concern that has kept analysts and investors on the sidelines about Conseco's stock.

But after today's announcements, made after the markets closed, Conseco's shares shot up 14 percent to $5.69 apiece in after-hours trading.

Earlier this year, Conseco survived a brush with financial disaster after its public accounting firm threatened to issue a warning about Conseco's ability to stay in business. Conseco risked breaching its bank agreements because the value of its investment assets had plunged in the global financial crisis.

Conseco successfully renegotiated its lending agreements, agreeing to pay higher interest in exchange for looser restrictions.

The company's stock has surged since then, but some investors have remained concerned, citing the convertible bonds that could come due in September.

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  1. So as I read this the one question that continues to come to me to ask is. Didn't Indiana only have a couple of exchanges for people to opt into which were very high because we really didn't want to expect the plan. So was this study done during that time and if so then I can understand these numbers. I also understand that we have now opened up for more options for hoosiers to choose from. Please correct if I'm wrong and if I'm not why was this not part of the story so that true overview could be taken away and not just parts of it to continue this negative tone against the ACA. I look forward to the clarity.

  2. It's really very simple. All forms of transportation are subsidized. All of them. Your tax money already goes toward every single form of transportation in the state. It is not a bad thing to put tax money toward mass transit. The state spends over 1,000,000,000 (yes billion) on roadway expansions and maintenance every single year. If you want to cry foul over anything cry foul over the overbuilding of highways which only serve people who can afford their own automobile.

  3. So instead of subsidizing a project with a market-driven scope, you suggest we subsidize a project that is way out of line with anything that can be economically sustainable just so we can have a better-looking skyline?

  4. Downtowner, if Cummins isn't getting expedited permitting and tax breaks to "do what they do", then I'd be happy with letting the market decide. But that isn't the case, is it?

  5. Patty, this commuter line provides a way for workers (willing to work lower wages) to get from Marion county to Hamilton county. These people are running your restaurants, hotels, hospitals, and retail stores. I don't see a lot of residents of Carmel working these jobs.

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