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verfasst von XERXES, 08.03.2002, 09:51

Resignation and Debt Warning Add to the Troubles at Conseco
By GRETCHEN MORGENSON

Prospects for Conseco Inc. (news/quote), the beleaguered consumer-finance and insurance company, dimmed yesterday as its chief financial officer abruptly resigned and a debt-rating agency warned that the company might not be generating enough cash to meet its obligations.

To some analysts, the unexpected departure of Chuck Chokel, the chief financial officer, took on a somewhat darker significance because it came even as the company was working with PricewaterhouseCoopers, its auditor, to prepare its annual report to shareholders. It is highly unusual for a chief financial officer to leave a company in the midst of its annual audit. The company's annual report must be filed by the end of March.

Shares of Conseco fell 67 cents, or 15 percent, to $3.75. Last May, the stock traded as high as $20.24 as investors seemed confident that Gary Wendt, then relatively new to the job as Conseco's chief executive, could turn the company around.

"Losing the C.F.O. just before they are to file statements, particularly a C.F.O. that had brought some much-needed credibility to Conseco's financial reporting, we do view this with considerable concern," said Colin Devine, an analyst at Salomon Smith Barney who has been negative on the shares since autumn."The bottom line for investors is this is a bad situation that is getting worse and our sell rating and $1 price target for the company's shares say it all."

Adding to Conseco's woes, Moody's Investors Service urged investors in a report issued before the market opened yesterday to view Conseco's financial position with caution and said that although the company had found alternative sources to generate cash to pay down debt, the company would have to provide its accountants with"a viable plan" for meeting all its obligations due this year. Without such a plan, Moody's (news/quote) said, Conseco's accountants could issue a qualified opinion questioning the company's ability to continue operating.

Mark Lubbers, a Conseco spokesman, said Mr. Chokel left Conseco to pursue other interests and declined to comment further. Mr. Chokel joined Conseco last March, after 23 years at the Progressive Corporation (news/quote), a large automobile insurance company. That departure came after he was passed over for promotion to chief executive.

Mr. Lubbers also said there was nothing new in the Moody's report and that he expected the company to receive an unqualified opinion from its auditors."We are very confident that we will demonstrate the wherewithal to meet all of our debt service obligations in '02," he said.

But Mr. Devine said that Conseco is still weighed down by its enormous debt."Corporate leverage has declined only about 3 percent since new management took over," he said."They have way too much debt and they have enormous and deteriorating asset quality problems in their consumer finance business and weakened earnings out of their life insurance business." Mr. Devine said that he expected more bad news from Conseco's annual filing.

Conseco may also get a possible downgrade on its insurance business from A. M. Best, the rating agency. A. M. Best warned in January that it could lower the company's A- rating if Conseco was unable to show proof by the end of this month that its turnaround was taking hold."If the insurance rating is downgraded there are certain businesses that they are basically shut out of," said Kathy Shanley, an analyst at Gimme Credit, an investment advisory newsletter that focuses on corporate bonds. Some analysts suspect that Mr. Wendt may have lost confidence in Mr. Chokel during a Conseco conference call on Feb. 21, when it announced its fourth-quarter and 2001 earnings. On the call, Mr. Wendt appeared to be embarrassed by a question about the balance sheet from Steven Eisman of the Chilton Investment Company, a money management firm. Mr. Eisman pointed out that Conseco's investment borrowings had risen from $929 million at the end of the third quarter to $2.24 billion at the end of the year.

Mr. Chokel indicated he had not noticed the increase, a gaffe for a chief financial officer."You say it's never been that high?" a flustered Mr. Wendt asked of Mr. Eisman.

Until Conseco names a new chief financial officer, Bill Shea, the president, will take on the position. Mr. Shea, who is also the chief operating office, joined Conseco last September. He was vice chairman and chief financial officer of BankBoston Corporation from 1993 to 1998. Before that, he was vice chairman of the Coopers & Lybrand accounting firm.





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gesamter Thread:

• Naechste Megapleite? - XERXES, 08.03.2002, 09:51
  • Kann dies jemand übersetzen?? - peter72, 08.03.2002, 12:03
    • Re: Kann dies jemand übersetzen?? $-$ Wozu, wenn der Laden nach XERXES eh am - Herbi, dem Bremser, 08.03.2002, 14:34
  • Re: Naechste Megapleite? - Amanito, 08.03.2002, 13:05