Pursuant to this transaction, Lehman Brothers will purchase approximately $1.5 billion in loans from Conseco Finance, with up to $500 million of the proceeds available to repay inter-company indebtedness owed to Conseco.
In a press release Thursday, David V. Harkins, Conseco chair and CEO since last week, said “this plan provides significant liquidity at both the holding company and finance company levels. We believe that these arrangements will provide the company with the necessary liquidity to pursue its previously announced strategy of selling Conseco Finance and refocusing on its core insurance operations.”
Last week under heavy investor pressure, Conseco Inc.’s two top executives resigned their posts. Chairman Stephen C. Hilbert and Chief Financial Officer Rollin M. Dick made the announcement April 27, saying Conseco’s market-value plummet over the last two years had impaired investor confidence in the pair.
Harkins and another Conseco executive, Thomas H. Lee, were chosen as interim chairman and CFO. The company’s first-quarter results showed operating earnings dropped to 30 cents per diluted share to $107 million, with net cash from operations of $315.7 million.
Standard & Poor’s lowered the company’s ratings in April on corporate credit, senior debt, preferred stock and commercial paper. And two stockholders have filed a class-action suit in an Indiana U.S. District Court alleging Conseco executives intentionally misled investors.
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