Bloomberg News

CARMEL, Ind. — Conseco Inc., the insurer whose shares have more than tripled off their lows last year, said it plans to issue $400 million in senior notes due in 2008 and will use the proceeds to retire bank debt in December.

The debt issue will be the first by Conseco since February 2000, just before the company revealed problems at its consumer-lending unit. In March 2000, it was writing down the value of securities on the books of the former Green Tree Financial Corp., which it bought in 1998 for $6 billion. That purchase left the company with a heavy debt load and caused the debt markets to dry up.

The issue announcement suggests that the debt-reduction plan put in place by Chairman Gary Wendt has eased concerns about Conseco’s ability to repay its $7.9 billion of debt. Under a deal worked out with banks last September, Conseco will repay $2 billion of bank and public debt by the end of this year.

“I think it’s a very healthy sign. I don’t think they could have done this last year,” said Matt Greenberg, a managing director at Iridian Asset Management, which owns about 7.6 million Conseco shares.

Conseco said the move will also enable it to repay $478 million in bank debt due in December and complete its debt reduction plan early without having to sell its stake in the wireless telecommunications specialist Telecorp PCS.

“It gives us total flexibility on when we sell Telecorp,” said Conseco spokesman Mark Lubbers. He said the company would retire the debt soon after the issue was completed.

Conseco and other holders of Telecorp stock are barred from selling their stakes until November. The value of Conseco’s 17.2 million Telecorp shares has fluctuated between a high of about $700 million and a low of $200 million. Its stake is currently worth about $297 million.

The debt offering is being managed by Lehman Brothers Holdings. Other underwriters include Banc of America Securities, J.P. Morgan Securities, and UBS Warburg.

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