LYCOS RETRIEVER 
Conseco: Banks
built 635 days ago
On Dec. 17, 2002, Conseco filed for Chapter 11 bankruptcy after reaching a tentative pact with its major creditors to restructure roughly $6.5 billion in debt. In making the filing, Conseco attorneys told a federal bankruptcy judge that the company could emerge from Chapter 11 protection by the second quarter of 2003 -- perhaps sooner -- under terms of an agreement with its major creditors.
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One other notable number in the earnings release was the jump in certificates of deposit at Conseco's bank, which has been a major source of borrowing and liquidity for the company's credit card business. CDs rose $223 million from second-quarter levels to nearly $2 billion at the end of the third quarter. As Conseco's problems mount, investors may be less willing to lend money to Conseco by investing in CDs. And bank regulators may ... call a stop if they think Conseco is in jeopardy.
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Last month Bank of America forced payment of $250 million of its Conseco preferred securities. But apparently it could only get half of its payment in cash. The other half? The bank essentially paid itself by extending a $125 million loan to Conseco. That moved it forward in the line of creditors.
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The second is from PricewaterhouseCoopers, Conseco's auditor, which has not said whether it will give an unqualified audit opinion or warn that Conseco's ability to continue as a going concern is in doubt. That decision may hinge in part on Conseco's progress in renegotiating its bank debt and on expectations for the success of the tender offers announced yesterday.
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