Penn Treaty America closes $38 million convertibles offering

New York, Feb. 6 - Penn Treaty American Corp. said it closed its offering of 6¼% convertible subordinated notes due 2008 at a size of $38 million.

The Allentown, Pa. insurance company said it received an additional $5.9 million of commitments on Thursday, the last day of the offering. Settlement is scheduled for Feb. 12.

Proceeds from the offering will be used to increase the company's insurance subsidiaries' statutory surplus, to retire the outstanding principal of its convertible subordinated notes due 2003, and to supplement parent company liquidity.

Penn Treaty American will entertain additional subscription requests through 5.00 p.m. ET on Feb. 14 via financial advisor Philadelphia Brokerage Corp.

The company had originally been planning a $45 million offering but reduced the size on Feb. 6, saying it only needed $35 to $40 million of new capital due to a recalculation of the capital requirements of the state of Florida as well as the delayed tender of a portion of the remaining notes due December 2003.

It had previously been looking to raise $45 million through a rights offering - which generated $20 million of interest - and a $25 million direct placement to investors.

In exchange for the commitments to buy new notes, Penn Treaty American said it lowered the conversion price of the new notes to $1.75 from $2.50 and of the existing notes to $1.75 from $4.50.

There will also be call and mandatory conversion protection until Oct. 15, 2005.

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