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Paulson Buys 9.9% Of Insurer Conseco
After making repeated killings as a short (and being compensated for it), John Paulson is now actively looking for undervalued long opportunities (that are not misreported by the NYPost). Such seems to be the reasoning behind his latest disclosed involvement in insurer Conseco, where he is now the proud owner of 9.9% of the common stock after a $280 million investment.
Conseco, Inc. (NYSE:CNO)
announced today that, as part of a series of transactions intended to enhance
its capital position, it entered into a stock and warrant purchase agreement
with Paulson & Co. Inc., on behalf of the several investment funds and
accounts managed by it (collectively, "Paulson"), to sell to Paulson 16.4
million shares of common stock and warrants to purchase 5.0 million shares of
common stock for an aggregate purchase price of $77.9 million. In addition,
Conseco announced its intention to privately offer, subject to certain
conditions, up to $293.0 million aggregate principal amount of convertible
senior debentures to fund a substantial portion of the purchase price of its
existing convertible debentures that are tendered in a cash tender offer for
its existing convertible debentures that Conseco intends to commence in the
near future.
Upon closing the private sale of common stock, Paulson will own approximately
9.9% of Conseco's outstanding shares, including shares Paulson previously
acquired in open market transactions. Conseco will grant certain registration
rights to Paulson in connection with its acquisition of the common stock and
warrants. Half of the net proceeds from the issuance of these shares will be
used to repay indebtedness under Conseco's credit agreement.
Paulson's read on the situation: "Conseco has a sound business model and, with this
financing, a much improved financial position. We have great confidence in Conseco’s
future direction, in Jim Prieur, his management team and the
board of directors." Hopefully that is the case: the company was forced to file for chapter 11 last time around 7 years ago:
The insurer filed for bankruptcy court protection from
creditors in 2002 after Stephen Hilbert, Conseco’s founder and
former chief executive, bought Green Tree Financial Corp., a
mobile home lender. Conseco declared a $6.7 billion loss on that
investment after customers defaulted on loans.
Yet what Paulson sees in terms of upside value here is irrelevant: with the imitators now soundly on board, the stock is up 20% today.
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how much blood will they be able to suck out of this corpse, before they drop it in the dirt
He's still holds a lot of Junk......
wonder if he is still holding all that bac crap...
Why do you think BAC has become the new champ in naked swaps and national arbitrage, taking the positions JPM won't in the space?
I am sure Paulson knows as well as anyone that if you dress it for a date it will find a date.
About the only thing the NY Post is good at is following the journalistic integrity of its London cousin. Too bad for the NY Post they are limited in the graphics they can employ to sell their message in ways the Sun is not. For my fellow citizens who are in the dark let me introduce you to the phenomenon that is Page 3. No wonder the old adage that a big lie is easier to sell with a bit of sugar.
http://www.page3.com/girls_home.shtml
If memory serves, Hilbert partied like a rock star. Mansions & hookers...like a cheap man's Hefner
Used to have them as a selling option in a previous life. No one trusted that they would be around very much longer, let alone honor their contracts. Management was a joke and Conseco was usually the sucker that would take business others wouldn't. In other words, the subprime underwriter.
Most financial service business is a pyramid structure, but Conseco back then was paying stupid amounts just to keep up the 'revenue growth.' No one could understand the accounting they were using to show 'better numbers' every year.
If this guy bought a melting iceberg in Greenland it would go up 20% the day it was made public. No one wants to be on the opposite side of his positions. Having said that, he's also the same guy that loaded up on gold mining stocks 8 months ago, and shorted sub-prime before that. Given his information resources, he's taken a long-term position for a reason.
TD - What's with the CAPTCHA today? No double negatives?!
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