Close Close

Financial Planning > College Planning > Student Loan Debt

Conseco Gets Lower Interest Rates

Your article was successfully shared with the contacts you provided.

Conseco Inc. has succeeded at replacing some of its secured debt with cheaper, more flexible unsecured debt.[@@]

Conseco, Carmel, Ind., had to borrow money on unattractive terms to finance its recovery from Chapter 11 bankruptcy reorganization proceedings in September 2003.

Conseco, a holding company for life and health insurance companies, recently asked investment bankers to help it reduce the principal amount borrowed through a senior secured credit agreement.

The investment bankers responded by helping Conseco raise a total of $330 million by issuing convertible debentures, or unsecured notes, through a private placement.

The proceeds helped Conseco reduce credit facility debt to $447 million, from $767 million. The company also reduced the spread on a major portion of its debt to 2 percentage points over the London Interbank Offered Rate, a major international interest rate benchmark, from 3.5 percentage points over LIBOR.

Improvements in the company’s credit facility rating could cut the spread to 1.75 percentage points over LIBOR, Conseco says.