Conseco rises on earnings; Windstream steady as acquisition announced; LCDX dips with equities

By Sara Rosenberg

New York, May 11 - Conseco Inc.'s term loan gained a couple of points during Monday's quiet trading session following the company's release of earnings results that showed year-over-year improvements.

In other news, Windstream Corp.'s term loan stayed pretty firm after news of an acquisition, which would lead to a revolver draw, hit the market, and the LCDX 12 index was a little softer in sympathy with stocks.

Conseco jumps with numbers

Conseco's term loan rallied by a few points during market hours, although it didn't trade that much, as the company came out with first-quarter results that included better net income and revenues, according to a trader.

The term loan was quoted at 48 bid, 53 offered, up from Friday's levels of 43 bid, 46 offered, the trader said.

For the first quarter, Conseco reported net income of $24.5 million, or $0.13 per diluted share, compared to a net loss of $7.2 million, or $0.04 per diluted share, in the first quarter of 2008.

And, revenues for the quarter were $1.07 billion, compared to $1.028 billion in the same period last year.

Conseco debt to capital improves

Also on Monday, Conseco announced that its debt-to-total capital ratio at March 31 was 27.6%, compared to 27.8% at Dec. 31.

"Conseco showed continued improvement and profitability in all three insurance businesses for the first quarter, which is a seasonally low quarter for our earnings," said Jim Prieur, chief executive officer, in a news release.

"Core sales increased by 4% overall. We set records in the quarter for new agent contracts in our wholly owned distribution channels, and new agency appointments rose 73% in our independent channel, all key to future sales growth," Prieur added.

Conseco is a Carmel, Ind.-based insurance company.

Windstream steady on acquisition

Windstream's term loan held pretty flat during the session following news that the company is purchasing D&E Communications in a transaction valued at about $330 million, according to traders.

The term loan was quoted by one trader at 92½ bid, 95½ offered, unchanged on the day. A second trader, saw some slight movement in levels, quoting the debt at 93¼ bid, 95¼ offered, compared to 93½ bid, 95 offered on Friday.

On Monday morning, Windstream announced that it will give D&E Communications' shareholders 0.65 shares of Windstream stock and $5 in cash per share in order to acquire the company.

Windstream said that it expects to issue about 9.5 million shares of stock valued at $86 million, based on the company's closing stock price on May 8, and pay about $73 million in cash as part of the transaction.

The cash payment will come from borrowings under the company's existing revolving credit facility as well as from cash on hand.

In addition, Windstream will assume estimated net debt of about $171 million.

The acquisition is expected to close in the second half of 2009, subject to certain conditions, including necessary approvals from federal and state regulators and D&E shareholders.

Windstream transaction accretive

According to Windstream, the acquisition of D&E Communications will be accretive to free cash flow after expected annual synergies of about $25 million in operating expenses and capital expenditure savings.

D&E Communications generated $148 million in revenue and $64 million in operating income before depreciation and amortization in the 12 months ended March 31.

The transaction value represents a multiple of 3.7 times operating income before depreciation and amortization, after expected synergies.

"D&E Communications is an exceptional, well-run company with a quality network that is 100% broadband capable," said Jeff Gardner, president and chief executive officer of Windstream, in a news release.

"These properties significantly expand our operations in Pennsylvania and provide the opportunity to grow cash flow, reduce our dividend payout ratio and create value for shareholders and customers," Gardner added.

Windstream is a Little Rock, Ark.-based provider of digital phone, high-speed Internet and high-definition video and entertainment services. D&E is an Ephrata, Pa.-based integrated communications provider.

LCDX slides lower

The LCDX 12 index was a little weaker on Monday as the stock market posted some losses, according to a trader.

The index was quoted at 83.10 bid, 83.30 offered, down from Friday's levels of 83.20 bid, 83.40 offered, the trader said.

Nasdaq closed down 7.76 points, or 0.45%, Dow Jones Industrial Average closed down 155.88 points, or 1.82%, S&P 500 closed down 19.99 points, or 2.15%, and NYSE closed down 151.09 points, or 2.52%.

Meanwhile, the cash loan market in general was pretty quiet with some things feeling a little softer and some things feeling a little bit firmer, according to a second trader.

The trader remarker that a lot of high-yield crossover guys are starting to look at the high-yield new issues instead of trading all the crossover names, which may have contributed to the low volume on Monday.

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