NU Online News Service, Nov. 19, 1:10 p.m. – Conseco Inc., Carmel, Ind., says it hopes to cope with its mounting losses by restructuring its debts through a voluntary bankruptcy court filing, but the company concedes that it might face an involuntary bankruptcy petition.
Conseco emphasizes in its latest quarterly financial report that it’s still talking to its creditors about designing a plan for restructuring its debt.
“If an agreement on such a plan is reached, the Company would present the plan for judicial approval under Chapter 11 of the U.S. Bankruptcy Code, which provides for companies to reorganize and continue to operate as going concerns,” Conseco says in the report, which was filed today with the U.S. Securities and Exchange Commission.
But “the Company is not currently in a position to predict the outcome of these discussions,” Conseco warns. “As a result of our current defaults, certain debt holders of the Company could at any time file an involuntary petition against the Company under the U.S. Bankruptcy Code although we are not aware of any current efforts to do so.”
Conseco, which last week notified the SEC that it had to delay the filing of its quarterly statement because of problems with valuing its special charges, is reporting a $1.8 billion net loss for the third quarter on $853 million in revenue, compared with a $411 million net loss on $1.5 billion in revenue for the third quarter of 2001.
The net loss for the latest quarter includes a $701 million charge resulting from a reduction in the stated value of interests in securitization transactions held by the Conseco Finance unit; a $500 million charge resulting from a reduction in the stated value of past acquisitions; $278 million in investment losses; a $110 million increase in long-term care insurance reserves; and a $140 million loss on discontinued variable annuity operations.
The insurance and fee-based operations are reporting a $7.1 million operating loss for the latest quarter on $1.2 billion in revenue, compared with $197 million in operating income on $1.2 billion in revenue for the comparable quarter in 2001.
Conseco’s quarterly financial statement is available on the Web at http://www.sec.gov/Archives/edgar/data/719241/000071924102000018/0000719241-02-000018.txt
Conseco also announced that its board has elected William Shea to be chief executive officer as well as president, and Eugene Bullis to be chief financial officer as well as executive vice president for finance and administration.
Shea had been acting chief financial officer since March.