Conseco Inc. has won an amendment to its bank loans that gives it more breathing room to operate.
But the Carmel-based insurance holding company will pay for it. The cash interest rate Conseco is paying on the $912 million in loans will rise from 2.6 percent to at least 6.5 percent, with a payment equal to 1 percent of the principal balance tacked on when the loans mature.
It’s unclear if the amendments announced this morning will help Conseco avoid receiving a warning about its ability to stay in business from its auditor, PricewaterhouseCoopers. The company said it would file its annual report with its auditor’s opinion today.
When Conseco announced March 2 that its auditor might issue the “going concern,” its share price swooned. But the shares recovered somewhat last week when Conseco said it was negotiating with its lenders for an amendment. The stock traded at 74 cents a share this morning, up 6 cents.
The amendment makes the following changes in Conseco’s senior credit facility:
– An increase in the maximum debt-to-capital ratio to 32.5 percent until June 30, 2010, then returning to 30 percent;
– A decrease in the minimum risk-based capital ratio to 200 percent until June 30, 2010, then returning to 250 percent;
– A decrease in the minimum level of statutory capital to $1.1 billion through June 30, 2010, then returning to $1.27 billion;
The amendment also places additional restrictions on the company’s ability to add certain kinds of debt.