Conseco Finance Restructure Plan

July 28, 2000

The plan calls for eliminating five business lines, reducing costs by over $150 million, and positioning Conseco Finance to be a positive cash contributor going forward.

The near-term issues being confronted include repayment of debt as due, particularly that scheduled for the next 12 months; restoration of credit ratings, particularly the A.M. Best rating, which was decreased to B++ during the second quarter; and repositioning Conseco Finance so that it will be a cash generator to, rather than a user from, the parent company

. “To manage those three issues efficiently without diminishing shareholder value, three of my former GE associates, Paul Street, Mike borom and Peter Keenoy, have joined our team of ‘restoration activists.’ Their experience in managing similar situations while working together at GE Capital is already being applied with notable progress,” said CEO Gary C. Wendt.

Several non-strategic assets have been identified and are positioned to be sold or run off. They include assets acquired at the holding company through Conseco Private Capital Group, including the Lawrenceburg riverboat and Tritel; and a sub-prime auto portfolio, which has already resulted in cash proceeds of approximately $150 million; five units of Conseco Finance – asset-based lending, vendor finance, bankcards, transportation and park construction will be sold or run off; the bankcard portfolio has already been sold, resulting in additional cash realized of $152 million; additionally, enhanced utilization of assets held by Conseco Finance can produce immediate cash benefits; and certain insurance lines, which are not operating profitably will, after some additional examination – and unless they are easily fixable – be disposed of, thereby releasing capital. These actions have already generate cash sufficient to pre-pay $300 million in principal due Sept. 1. When fully realized, these items should be sufficient to manage all principal due this year and well into 2001.

Was this article valuable?

Here are more articles you may enjoy.