For Release Immediate
Contacts (News Media) Jim Rosensteele, SVP, Corporate
Communications 317.817.4418
(News Media) Brenda Adrian, Sitrick and Company Inc. 212.573.6100
(Investors) Tammy Hill, SVP, Investor Relations 317.817.2893
Conseco, Inc. Emerges from Chapter 11
Indianapolis, Ind., Sept. 10, 2003. Conseco, Inc. announced today that its sixth
amended joint plan of reorganization under Chapter 11, which was confirmed by
the U.S. Bankruptcy Court yesterday, has become effective. William J. Shea,
Conseco's president and CEO, said, "We are very pleased to announce that Conseco
has emerged from bankruptcy court protection as a financially stable company now
totally focused on the insurance business."
New capital structure
Under the terms of the plan, the company has emerged as a Delaware corporation
with a new capital structure consisting of: (1) a $1.3 billion secured bank
facility; (2) new convertible preferred stock with an aggregate liquidation
preference of approximately $860 million; (3) new warrants to purchase 6 million
shares of common stock at an exercise price of $27.60 per share; and (4)
approximately 100 million shares of new common stock. The company expects to
issue these securities shortly, pursuant to the terms of the plan.
The new common stock has been approved for listing on the New York Stock
Exchange (NYSE) under the symbol "CNO," and the new warrants have been approved
for listing on the NYSE under the symbol "CNO WS." "Regular way" trading of the
new common stock and new warrants is expected to commence in the near future.
The common stock is currently trading on a "when issued" basis in the
over-the-counter market under the symbol "CNSJV." The company's former common
stock (OTCBB:CNCEQ) has been cancelled.
The new convertible preferred stock will be distributed to the prepetition
lenders, the new warrants will be distributed to the holders of the Trust
Preferred Securities commonly known as "TOPrS," and the new common stock will be
distributed to the holders of the following prepetition claims: (1) bonds, which
were separately classified as the Exchange Note Claims (those who had exchanged
their bonds in 2002) and the Original Note Claims (those who had not); (2)
general unsecured claims against Conseco, Inc.; (3) general unsecured claims
against CIHC, Incorporated (CIHC); and (4) TOPrS. The initial distribution of
approximately 98 million shares of new common stock is expected to be made as
follows:
o Exchange Note Claims will receive approximately 60.6 million shares, which
corresponds to a projected recovery of approximately 72%.
o Original Note Claims will receive approximately 32.3 million shares, which
corresponds to a projected recovery of approximately 42%.
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Conseco (2)
Sept. 10, 2003
o Conseco General Unsecured Claims will receive approximately 1 million
shares, which corresponds to a projected recovery of approximately 22%.
o CIHC General Unsecured Claims will receive approximately 1.9 million
shares, which corresponds to a projected recovery of approximately 100%.
o TOPrS will receive 1.5 million shares, which corresponds to a projected
recovery of approximately 1.27% (excluding the new Conseco warrants and
other collection rights).
In each case, the projected recoveries are based on an estimated value of the
common stock of $16.40 per share for purposes of the plan. The initial
distributions are expected to represent approximately 98% of all new common
stock to be distributed under the plan. The company may make additional
distributions to holders of prepetition bonds and/or general unsecured claims on
account of disputed claims. Under the plan, there will be only one distribution
of new common stock to holders of the TOPrS.
New board of directors takes office
"As part of the reorganization," Shea said, "we have selected a new board of
directors. I have been joined on the Board by six new independent directors
selected by the official creditors committee through a formal selection
process:"
o R. Glenn Hilliard (60) (the non-executive chairman of the board) is the
retired former chairman and chief executive officer of ING Americas. As CEO
of ING Americas, he was responsible for insurance, funds and retail banking
operations in North and South America. He also served as chairman of the
ING America Insurance Holdings Board.
o Philip Roberts (61) is a consultant for investment management firms,
advising on mergers, acquisitions and product development, having retired
as chief investment officer of the trust business at Mellon Financial
Corporation.
o Neal Schneider (58) is managing partner of the New York office of Smart and
Associates LLP, a business advisory and accounting firm.
o Mike Shannon (45) is the co-founder and current president and chief
executive officer of KSL Resorts, a firm that owns and operates resort
hotels and golf courses throughout the United States.
o Michael Tokarz (53) is a founding member and current CEO of Tokarz Cadigan
Partners LLC, a private investment firm focused on middle-market companies.
o John Turner (62) is chairman of Hillcrest Capital Partners, a private
equity firm, and is the retired vice chairman and member of the executive
committee for ING Americas.
(Visit conseco.com for more detailed biographical information on the
members of Conseco's new board.)
R. Glenn Hilliard, Conseco's new non-executive chairman, said: "Our near-term
goal is to build the capital in the insurance companies in order to put Conseco
on a track toward steady growth. Longer-term, our goal is to build a company
that delivers meaningful value to our customers, our shareholders, our
distribution partners and our associates. I'm convinced that this management
team and board will make that happen."
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Conseco (3)
Sept. 10, 2003
"Fresh start" accounting to be implemented
Conseco will adopt "fresh-start" reporting as of its emergence from Chapter 11,
in accordance with accounting rules. These rules require Conseco to revalue its
assets and liabilities to current estimated fair value, re-establish
shareholders' equity at the reorganization value determined in connection with
the plan, and record any portion of the reorganization value which cannot be
attributed to specific tangible or identified intangible assets as goodwill. The
adoption of fresh start accounting will have a material effect on Conseco's
financial statements. As a result, the company's financial statements published
for periods following Sept. 9, 2003, will not be comparable with those prepared
before that date.
The Sixth Amended Joint Plan of Reorganization is available at
http://www.bmccorp.net/conseco.
Conseco, Inc.'s insurance companies help protect working American families and
seniors from financial adversity: Medicare supplement, cancer, heart/stroke and
accident policies protect people against major unplanned expenses; annuities and
life insurance products help people plan for their financial future.
Note on forward-looking statements: Some of the statements contained in this
press release are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements include those that
use words such as "anticipate," "believe," "plan," "estimate," "expect,"
"project," "intend," "may," "will," "would," "contemplate," "possible,"
"attempts," "seeks," "should," "could," "goal," and other similar expressions.
Forward-looking statements are subject to known and unknown risks, uncertainties
and other factors which may cause actual results, performance or achievements to
be materially different from the future results, performance or achievements
expressed or implied by the forward-looking statements. Assumptions and other
important factors that could cause our actual results to differ materially from
those anticipated in our forward-looking statements include, among other things:
(i) the potential lingering adverse impact of the Chapter 11 petitions on
Conseco's operations, management and employees; (ii) the successful consummation
of the plan of reorganization of Conseco Finance; (iii) general economic
conditions and other factors, including prevailing interest rate levels, stock
and credit market performance and health care inflation, which may affect (among
other things) Conseco's ability to sell its products, its ability to make loans
and access capital resources and the costs associated therewith, the market
value of Conseco's investments, the lapse rate and profitability of policies,
and the level of defaults and prepayments of loans made by Conseco; (v)
Conseco's ability to achieve anticipated synergies and levels of operational
efficiencies, including from our process excellence initiatives; (iv) customer
response to new products, distribution channels and marketing initiatives; (v)
mortality, morbidity, usage of health care services and other factors which may
affect the profitability of Conseco's insurance products; (vi) performance of
our investments; (vii) changes in the Federal income tax laws and regulations
which may affect the relative tax advantages of some of Conseco's products;
(viii) increasing competition in the sale of insurance and annuities; (ix)
regulatory changes or actions, including those relating to regulation of the
financial affairs of our insurance companies, regulation of financial services
affecting (among other things) bank sales and underwriting of insurance
products, regulation of the sale, underwriting and pricing of products, and
health care regulation affecting health insurance products; (x) actions by
rating agencies and the effects of past or future actions by these agencies on
Conseco's business, including the impact of recent rating downgrades; (xi) the
ultimate outcome of lawsuits filed against Conseco; and (xii) the risk factors
or uncertainties listed from time to time in Conseco's filings with the
Securities and Exchange Commission and with the U.S. Bankruptcy Court in
connection with the Company's Chapter 11 petitions. Other factors and
assumptions not identified above are also relevant to the forward-looking
statements, and if they prove incorrect, could also cause actual results to
differ materially from those projected.
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