NU Online News Service, Feb. 20, 3:38 p.m. – Penn Treaty American Corp., Allentown, Pa., says investors have paid it $29 million in cash for Penn Treaty notes due in 2008.
The company says it believes another $4 million may still come in.
The notes pay an interest rate of 6.25%. Holders will have the right to convert the notes into common stock at a price of $1.75 per share.
Penn Treaty has used $16 million of the proceeds from the note sale to beef up capital reserves at its Penn Treaty Network America Insurance Company subsidiary. The subsidiary now complies with Florida’s capital requirements, Penn Treaty says.
Penn Treaty wants to use the rest of the cash to increase its liquidity and pay off some notes due later this year.
In related news, Penn Treaty is reporting that three executives and directors have invested about $75,000 in its common stock.
William Hunt, the president, has spent about $39,000 on Penn Treaty stock.
Cameron Waite, the chief financial officer, has invested about $21,000, and Gary Hindes, a director, has invested about $15,000.
Penn Treaty helped develop the modern LTC insurance market, but it ran into trouble in 2001 because of regulators’ concerns that its LTC insurance sales were outstripping its capital reserves. The company has been working since then to raise capital.