NU Online News Service, Feb. 5, 2004, 4:35 p.m. EST – Penn Treaty American Corp., Allentown, Pa., says it is raising $14 million by selling notes through a private placement.[@@]
Penn Treaty helped create the modern long term care insurance market, but it ran short on capital in 2001. The company has been working to rebuild its capital levels ever since. The proceeds from the note sale should help the company make all debt payments due through October 2005, the company says.
The notes pay an annual interest rate of 6.25% and are due in 2008.
Holders of the notes can convert them into Penn Treaty stock at a price of $1.75 per share if the market price of the stock exceeds $1.93.
Philadelphia Brokerage Corp., Wayne, Pa., will be making a market in the notes, and Penn Treaty says it plans to register the notes with the U.S. Securities and Exchange Commission so that the institutions and wealthy individuals that buy the notes can resell them.
Shareholders have a right to vote on the issuance of the notes. If shareholders reject the note sale, Penn Treaty will buy the notes back, the company says.