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8-K - PRESS RELEASES DATED 12/8/09 - CNO Financial Group, Inc. | form8k.htm |
EX-99.1 - PRESS RELEASE - EARNINGS OUTLOOK - CNO Financial Group, Inc. | exhibit991.htm |
Exhibit 99.2
For
Release Immediate
Contacts (News Media) Tony Zehnder,
Corporate Communications 312.396.7086
(Investors) Scott Galovic, Investor Relations 317.817.3228
Conseco
Seeks Amendment to Senior Credit Facility to Provide Covenant Relief in Exchange
for Additional Principal Payments;
Changes
Would Be Subject to Completion of Public Stock Offering
Carmel, Ind., December 08,
2009: Conseco, Inc. (NYSE: CNO), reported today that it is seeking an
amendment to its senior credit facility. The amendment would become
effective upon the closing of the Company’s previously announced proposed public
offering of common stock. “This amendment would provide additional
covenant margin over the next two years, allowing us greater focus on profitably
growing our business segments and increasing shareholder value,” said Conseco
CFO Ed Bonach.
The
changes to the senior credit facility being sought would include:
·
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the
minimum risk-based capital ratio requirement would remain at 200% through
December 31, 2010 and would increase to 225% for 2011 and 250% for 2012
(the risk-based capital requirement is currently scheduled to return to
250% after June 30, 2010);
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·
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the
required minimum level of statutory capital and surplus would remain at
$1.1 billion through December 31, 2010 and would increase to $1.2 billion
for 2011 and $1.3 billion for 2012 (the required minimum level of
statutory capital and surplus is currently scheduled to return to $1.27
billion after June 30, 2010);
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·
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the
interest coverage ratio requirement would remain at 1.5x through December
31, 2010 and would increase to 1.75x for 2011 and 2.0x for 2012 (the
interest coverage ratio requirement is currently scheduled to return to
2.0x after June 30, 2010); and
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·
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the
debt to total capital ratio requirement would remain at 32.5% through
December 31, 2009 and would change to 30.0% thereafter (the debt to total
capital ratio requirement is currently scheduled to return to 30.0% after
June 30, 2010).
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In
exchange for the covenant relief, Conseco would agree to pay $150 million of the
first $200 million of net proceeds from its proposed public offering of common
stock to the lenders and, in addition, to pay 50% of any net proceeds in excess
of $200 million from the offering. The credit facility currently
requires the Company to pay 50% of the net proceeds of any equity issuance to
the lenders.
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Conseco
(2)
December
08, 2009
The
amendment would modify the Company’s principal repayment schedule to eliminate
any principal payments in 2010 and provides for principal payments of $35
million in 2011, $40 million in 2012 and $40 million in 2013. The
Company currently is required to make principal repayments equal to 1% of the
initial principal balance each year, subject to certain adjustments, and to make
additional principal repayments from excess cash flow. The current
principal balance of the senior credit facility is $817.8 million, and the
senior credit facility matures in October 2013.
The
amendment would also provide that the 1% payment in kind, or PIK, interest that
has accrued since March 30, 2009 as an addition to the principal balance under
the senior credit facility would be replaced with a payment of an equal amount
of cash interest. The amount of accrued PIK interest (expected to be
approximately $6 million) would be paid in cash when the amendment becomes
effective. The deletion of the 1% PIK interest and the payment of an
equal amount of cash interest would not impact reported interest
expense. The amendment would become effective on the date, on or
before January 15, 2010 (unless extended by the agent for the lenders), on which
the Company makes the principal payment described above from the net proceeds of
the public offering of the common stock. In connection with the
amendment, Conseco would expect to incur approximately $2.3 million of fees and
expenses and to write off approximately $1 million of unamortized debt issuance
costs.
This
press release does not constitute an offer to sell, or the solicitation of an
offer to buy, any securities. A registration statement relating to
common stock of the Company has been filed with the Securities and Exchange
Commission but is not yet effective. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective.
About
Conseco
Conseco,
Inc.’s insurance companies help protect working American families and seniors
from financial adversity: Medicare supplement, long-term care, cancer,
heart/stroke and accident policies protect people against major unplanned
expenses; annuities and life insurance products help people plan for their
financial futures. For more information, visit Conseco’s web site at
www.conseco.com.
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Conseco
(3)
December
08, 2009
Cautionary
Statement Regarding Forward-Looking Statements. Our statements, trend analyses and
other information contained in this press release relative to markets for
Conseco’s products and trends in Conseco’s operations or financial results, as
well as other statements, contain forward-looking statements within the meaning
of the federal securities laws and the Private Securities Litigation Reform Act
of 1995. Forward-looking statements typically are identified by the
use of terms such as “anticipate,” “believe,” “plan,” “estimate,” “expect,”
“project,” “intend,” “may,” “will,” “would,” “contemplate,” “possible,”
“attempt,” “seek,” “should,” “could,” “goal,” “target,” “on track,” “comfortable
with,” “optimistic” and similar words, although some forward-looking statements
are expressed differently. You should consider statements that contain these
words carefully because they describe our expectations, plans, strategies and
goals and our beliefs concerning future business conditions, our results of
operations, financial position, and our business outlook or they state other
‘‘forward-looking’’ information based on currently available information.
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) our ability to continue to satisfy the
financial ratio and balance requirements and other covenants of our debt
agreements; (ii) liquidity issues associated with the right of holders of our
3.5% convertible debentures due 2035 to require us to repurchase such debentures
on September 30, 2010; (iii) general economic, market and political conditions,
including the performance and fluctuations of the financial markets which may
affect our ability to raise capital or refinance existing indebtedness and the
cost of doing so; (iv) our ability to generate sufficient liquidity to meet our
debt service obligations and other cash needs; (v) our ability to obtain
adequate and timely rate increases on our supplemental health products,
including our long-term care business; (vi) the receipt of any required
regulatory approvals for dividend and surplus debenture interest payments from
our insurance subsidiaries; (vii) mortality, morbidity, the increased cost and
usage of health care services, persistency, the adequacy of our previous reserve
estimates and other factors which may affect the profitability of our insurance
products; (viii) changes in our assumptions related to the cost of policies
produced or the value of policies in force at the effective date; (ix) the
recoverability of our deferred tax assets and the effect of potential ownership
changes and tax rate changes on its value; (x) our assumption that the positions
we take on our tax return filings, including our position that our 7.0%
convertible senior debentures due 2016 will not be treated as stock for purposes
of Section 382 of the Internal Revenue Code of 1986, as amended, and will not
trigger an ownership change, will not be successfully challenged by the Internal
Revenue Service; (xi) changes in accounting principles and the interpretation
thereof; (xii) our ability to achieve anticipated expense reductions and levels
of operational efficiencies including improvements in claims adjudication and
continued automation and rationalization of operating systems, (xiii)
performance and valuation of our investments, including the impact of realized
losses (including other-than-temporary impairment charges); (xiv) our ability to
identify products and markets in which we can compete effectively
against competitors with greater market share, higher ratings, greater financial
resources and stronger brand recognition; (xv) the ultimate outcome of lawsuits
filed against us and other legal and regulatory proceedings to which we are
subject; (xvi) our ability to complete the remediation of the
material weakness in internal controls over our actuarial reporting process and
to maintain effective controls over financial reporting; (xvii) our ability to
continue to recruit and retain productive agents and distribution partners and
customer response to new products, distribution channels and marketing
initiatives; (xviii) our ability to achieve eventual upgrades of
the financial strength ratings of Conseco and our insurance company
subsidiaries as well as the impact of rating downgrades on our business and our
ability to access capital; (xix) the risk factors or uncertainties listed from
time to time in our filings with the Securities and Exchange Commission; (xx)
regulatory changes or actions, including those relating to regulation of the
financial affairs of our insurance companies, such as the payment of dividends
and surplus debenture interest to us, 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; and (xxi) changes in the Federal
income tax laws and regulations which may affect or eliminate the relative tax
advantages of some of our products. 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. All forward-looking statements are expressly qualified in their
entirety by the foregoing cautionary statements. Our forward-looking
statements speak only as of the date made. We assume no obligation to
update or to publicly announce the results of any revisions to any of the
forward-looking statements to reflect actual results, future events or
developments, changes in assumptions or changes in other factors affecting the
forward-looking statements.
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