Conseco files for Chapter 11, Conseco Finance to be sold

New York, Dec. 18 - Conseco, Inc. and Conseco Finance Corp. made separate Chapter 11 filing and Conseco, Inc. said it reached agreement with its banks and bondholders on a restructuring of its debt while Conseco Finance will be sold.

Conseco, Inc. said its agreement would substantially reduce its debt.

Its Chapter 11 filing, in the U.S. Bankruptcy Court for the Northern District of Illinois, does not include its insurance companies, Conseco Services, LLC and Conseco Capital Management.

"We have reached an agreement in principle with the bank and bondholder representatives to reduce the company's leverage to a level that, together with our targeted operating performance, will support the efforts by the company's insurance subsidiaries to reclaim an 'excellent' financial strength rating from A.M. Best following the restructuring," said Conseco president and chief executive officer William J. Shea in a news release.

Conseco Finance Corp. will use its Chapter 11 filing to implement a sale of the company to CFN Investment Holdings LLC, a joint venture of Fortress Investment Group LLC, J.C. Flowers & Co., LLC, and Cerberus Capital Management, LP. Parent company Conseco, Inc. also made a Chapter 11 filing.

The buyers will pay an amount equal to Conseco Finance's outstanding secured debt to buy the company's assets and operations.

In addition to helping carry out the sale, the Chapter 11 filing will also be used to restructure Conseco Finance's manufactured housing servicing business.

The Chapter 11 filing covers Conseco Finance and Conseco Finance Servicing Corp. and was made in the U.S. Bankruptcy Court for the Northern District of Illinois. Excluded are Mill Creek Bank, Green Tree Retail Services Bank and Conseco Agency.

As required under the bankruptcy code, there will be an auction allowing higher bids for Conseco Finance.

Conseco Finance said it expects to complete the sale in the first quarter of 2003.

"The expected sale of these assets to a well-capitalized buyer is positive news for Conseco Finance," said Chuck Cremens, president and chief executive officer of Conseco Finance, in a news release. "We believe that the sale of the business will preserve the vast majority of our employees' jobs and enhance our ability to serve our customers."

The St. Paul, Minn. finance company said it has reached an agreement in principal with an affiliate of the buyer and one of its existing lenders for up to $125 million of debtor-in-possession financing.

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