NU Online News Service, Nov. 18, 9:18 a.m. – Wilbur Ross & Company, New York, has agreed to lend $20 million to Penn Treaty American Corp., Allentown, Pa., a major long-term care insurer, by buying senior convertible notes that pay an interest rate of 6.25% and mature in 2008, Penn Treaty says.
Penn Treaty plans to issue at least $45 million of the new 2008 notes, and the terms will be similar to those of another series of 2008 notes that was just issued, Penn Treaty says.
Earlier, Wilbur Ross, a major holder of Penn Treaty debt, had argued that the cost of converting the Penn Treaty notes into Penn Treaty common stock ought to be lower.
If Wilbur Ross makes good on its offer to lend Penn Treaty at least $20 million, Penn Treaty will lower the conversion price to $2.50 per share, from $4.50, Penn Treaty says.
Penn Treaty will offer the new notes to bondholders and shareholders of record as of Nov. 25.
Penn Treaty will use the proceeds from the new offering to meet regulatory capital requirements and pay off $15 million in debt that matures in December 2003.