Rumors swirling about Conseco

By Bill Koenig

June 29, 2000 Web posted at: 12:16 PM EDT (1616 GMT)

CARMEL, Indiana (Indianapolis Star) -- A prominent Wall Street analyst has issued a report raising the possibility that the Carmel-based financial services company will need to seek bankruptcy protection from creditors.

Meanwhile, rumors swirled on Wall Street that the company was close to naming a replacement for deposed chairman and chief executive Stephen C. Hilbert -- possibly former General Electric Co. executive Gary C. Wendt.

Speculation that Conseco would reach a deal with Wendt, who formerly headed GE's largest and most-profitable subsidiary, helped lift Conseco shares Tuesday to $6.50, an increase of 81 cents, or 14 percent.

However, Colin Devine, an analyst with Salomon Smith Barney in New York, said in a new research report that the company still faces major obstacles, including about $1 billion in debt scheduled to be repaid by the end of September.

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He also said "there is no certainty" Conseco will succeed in selling Conseco Finance, the troubled consumer finance business that it put up for sale in March.

"We believe the road ahead for Conseco is very uncertain, and investors need to consider the likelihood of a Chapter 11 filing as a growing possibility," Devine said in his report.

A Conseco representative said officials hadn't seen Devine's report, but said the company was positioning itself to overcome its challenges.

"In the stockholders meeting (this past Friday), we mapped out strategy and believe the financial resources we have at our disposal are adequate to meet our financial needs," said Jim Rosensteele, a Conseco spokesman. "On an individual basis, the (Conseco) insurance companies are very strongly capitalized."

Analysts said the company's credibility -- and stock price -- likely would increase if the company hires Wendt as chief executive and chairman. Dow Jones and Bloomberg News identified Wendt as a contender for the post.

Rosensteele said Conseco won't comment on specific candidates.

Wendt, former chief of GE Capital, had been considered a possible successor to Jack Welch, GE's chief executive. However, he resigned abruptly in 1998, despite his division's strong performance.

In the late 1980s, Wendt was the subject of a highly publicized divorce trial that focused on the sacrifices that corporate wives make for highflying executives.

Two years of legal proceedings resulted in Wendt paying $20 million to his former wife, Lorna Wendt.

Some analysts are skeptical that Conseco can snare Wendt, who has been heading an investment fund.

"I would guess it's somebody's pipe dream," said Ira Zuckerman, analyst with Nutmeg Securities in Connecticut.

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