Conseco buys back $52.5 million of 3.5% convertibles due 2035 at par

By Angela McDaniels

Tacoma, Wash., May 5 - Conseco, Inc. repurchased $52.5 million of its 3.5% convertible debentures due Sept. 30, 2035 at par plus accrued interest in a privately negotiated transaction, according to a company news release.

In connection with the repurchase, the company issued an additional $52.5 million principal amount of its 7% convertible senior debentures due 2016.

The first $176.49 million of the 7% convertibles was issued on Nov. 13 upon the settlement of a tender offer for the 3.5% convertibles, and an additional $64 million were issued in February.

The company has agreed to issue up to $293 million of the 7% convertibles in a private offering. Because of constraints imposed by a Conseco credit agreement, the company cannot issue new convertibles unless old ones are repurchased.

Following the latest repurchase, less than $100,000 of the 3.5% convertibles remain outstanding and $293 million of the 7% convertibles are outstanding.

As a result of the repurchase, Conseco expects to recognize a roughly $1 million loss on the extinguishment of debt, representing the write-off of unamortized discount and issuance costs associated with the 3.5% convertibles that were repurchased.

Conseco is a Carmel, Ind.-based insurer.

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