Penn Treaty American Corp. says the magic of a healthy stock price has helped change $46 million in convertible notes into 6.6 million shares of ordinary common stock.[@@]

The conversion means that Penn Treaty, Allentown, Pa., now has 22.3 million shares of common stock outstanding but that it no longer has to make any payments on convertible notes.

Penn Treaty, a company that helped create the modern long term care insurance market, says it issued a total of $134 million in convertible notes between 1996 and 2004.

Penn Treaty paid off $9 million in convertible notes in 2003, and $78 million in additional notes have turned into common stock over the past 3 years, the company says.

The last notes to convert paid an interest rate of 6.25% and were due in 2008.

The notes converted because the price of Penn Treaty stock stayed over $7.70 per share for 15 trading days following Oct. 15, Penn Treaty says.

Penn Treaty’s stock price plunged to $5 per share in early 2003, when the company was dealing with regulatory problems, but the stock has been selling for more than $8 per share this year.