<PAGE> 1
FILED UNDER RULE 424(b)(5)
Registration No. 333-27803
CONSECO LOGO
PRICING SUPPLEMENT
(TO PROSPECTUS DATED JUNE 24, 1997 AND
PROSPECTUS SUPPLEMENT DATED FEBRUARY 23, 1998)
$800,000,000
CONSECO, INC.
$550,000,000 6.4% MANDATORY PAR PUT REMARKETED SECURITIES(SM)("MOPPRS(SM)") DUE
JUNE 15, 2011
$250,000,000 6.8% NOTES DUE JUNE 15, 2005
------------------------
Conseco, Inc. (the "Company") is offering the 6.4% MandatOry Par Put
Remarketed Securities(SM)("MOPPRS(SM)") due June 15, 2011 and the 6.8% Notes due
June 15, 2005 (the "Notes" and, together with the MOPPRS, the "Offered
Securities"). The annual interest rate on the MOPPRS to June 15, 2001 (the
"Remarketing Date") is 6.4%. THE MOPPRS ARE SUBJECT TO MANDATORY TENDER ON THE
REMARKETING DATE. If Salomon Brothers Inc,
(continued on inside front cover)
SEE "RISK FACTORS RELATING TO THE NOTES" BEGINNING ON PAGE S-2 OF THE
ACCOMPANYING PROSPECTUS SUPPLEMENT FOR A DISCUSSION OF RISK FACTORS THAT SHOULD
BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE OFFERED SECURITIES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PRICING SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS
AND PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
The MOPPRS will be sold to the public at varying prices relating to
prevailing market prices at the time of resale to be determined by the MOPPRS
Underwriters (as defined herein) at the time of each sale. The net proceeds to
the Company before deducting expenses will be 102.267% of the principal amount
of the MOPPRS sold and the aggregate net proceeds before deducting expenses will
be $562,468,500, plus accrued interest, if any, from June 9, 1998. The Notes
will be sold in a fixed price offering on the terms set forth in the table
below. For further information with respect to the plan of distribution, see
"Supplemental Plan of Distribution."
<TABLE>
<CAPTION>
===============================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Per Note................................ 99.756% .625% 99.131%
- -------------------------------------------------------------------------------------------------------------------------------
Total................................... $249,390,000 $1,562,500 $247,827,500
===============================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from June 9, 1998.
(2) The Company has agreed to indemnify the Underwriters against or make
contributions relating to certain liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Supplemental Plan of
Distribution."
(3) Before deducting estimated expenses relating to the Offered Securities of
$900,000 payable by the Company.
------------------------
The Offered Securities are offered by the several Underwriters as specified
herein, subject to prior sale, when, as and if issued to and accepted by them
and subject to certain other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the Offered Securities will be made through the
book-entry facilities of DTC on or about June 9, 1998.
------------------------
MANAGERS OF THE MOPPRS
Joint Lead Managers
MERRILL LYNCH & CO. NATIONSBANC MONTGOMERY SECURITIES LLC
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
SBC WARBURG DILLON READ INC.
------------------------
MANAGERS OF THE NOTES
MERRILL LYNCH & CO.
BANCAMERICA ROBERTSON STEPHENS
DEUTSCHE BANK SECURITIES
FIRST UNION CAPITAL MARKETS
SALOMON SMITH BARNEY
------------------------
The date of this Pricing Supplement is June 4, 1998.
- ---------------
"MandatOry Par Put Remarketed Securities(SM)" and "MOPPRS(SM)" are service marks
owned by Merrill Lynch & Co., Inc.
<PAGE> 2
(continued from cover page)
as Remarketing Dealer (the "Remarketing Dealer"), has elected to remarket the
MOPPRS as described herein, the MOPPRS will be subject to mandatory tender to
the Remarketing Dealer at 100% of the principal amount thereof for remarketing
on the Remarketing Date, except in the limited circumstances described herein.
See "Description of the Offered Securities -- Description of the
MOPPRS -- Tender of MOPPRS; Remarketing." If the Remarketing Dealer for any
reason does not purchase all of the tendered MOPPRS on the Remarketing Date or
elects not to remarket the MOPPRS, or in certain other limited circumstances
described herein, the Company will be required to repurchase the MOPPRS from the
beneficial owners ("Beneficial Owners") thereof at 100% of the principal amount
thereof plus accrued interest, if any. See "Description of the Offered
Securities -- Description of the MOPPRS -- Repurchase."
Interest on the Offered Securities is payable semiannually on June 15 and
December 15 of each year, commencing December 15, 1998. Except in the limited
circumstances described herein, the MOPPRS are not subject to redemption by the
Company prior to the Remarketing Date.
If the MOPPRS remain outstanding after the Remarketing Date, the MOPPRS
will be redeemable from the holders of the MOPPRS as a whole or in part at the
option of the Company at any time after the Remarketing Date, at a redemption
price equal to the greater of (i) 100% of the principal amount thereof and (ii)
the sum of the present values of the remaining scheduled payments of principal
and interest thereon from the redemption date to the maturity date, computed by
discounting such payments, in each case, to the redemption date on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Redemption Treasury Rate (as defined herein) plus 25 basis points plus, in each
case, accrued and unpaid interest on the principal amount thereof to the date of
redemption. See "Description of the Offered Securities -- Description of the
MOPPRS -- Redemption."
The Notes will be redeemable as a whole or in part at the option of the
Company at any time, at a redemption price equal to the greater of (i) 100% of
the principal amount thereof and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon from the
redemption date to the maturity date, computed by discounting such payments, in
each case, to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Redemption Treasury Rate plus 25
basis points plus, in each case, accrued and unpaid interest on the principal
amount thereof to the date of redemption. See "Description of the Offered
Securities -- Description of the Notes."
Ownership of the Offered Securities will be maintained in book-entry form
by or through The Depository Trust Company ("DTC"). Interests in the Offered
Securities will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants. Beneficial Owners of
the Offered Securities will not have the right to receive physical certificates
evidencing their ownership except under the limited circumstances described
herein. Settlement for the Offered Securities will be made in immediately
available funds. The secondary market trading activity in the Offered Securities
will therefore settle in immediately available funds. All payments of principal
and interest on the Offered Securities will be made by the Company in
immediately available funds so long as the Offered Securities are maintained in
book-entry form. Beneficial interests in the Offered Securities may be acquired,
or subsequently transferred, only in denominations of $1,000 and integral
multiples thereof.
THE UNDERWRITERS MAY ENGAGE IN TRANSACTIONS THAT MAINTAIN OR OTHERWISE
AFFECT THE PRICE OF THE OFFERED SECURITIES. SUCH TRANSACTIONS MAY INCLUDE
OVER-ALLOTMENT TRANSACTIONS AND THE PURCHASE OF OFFERED SECURITIES TO COVER THE
UNDERWRITERS' SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"SUPPLEMENTAL PLAN OF DISTRIBUTION."
PS-2
<PAGE> 3
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities (including fees
received by the Company in connection with the Remarketing Agreement), estimated
to be approximately $809.4 million (after underwriting discounts and estimated
offering expenses), will be used by the Company for the repayment of commercial
paper. The commercial paper to be repaid matures in June 1998 and as of the date
of this Pricing Supplement the average interest rate on such commercial paper
was 5.78%.
DESCRIPTION OF THE OFFERED SECURITIES
DESCRIPTION OF THE MOPPRS
The following description of the particular terms of the MOPPRS offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Senior Notes described in the
accompanying Prospectus and Prospectus Supplement, to which description
reference is hereby made.
General
The MOPPRS are Senior Notes (as defined in the accompanying Prospectus
Supplement) issued under the Indenture dated as of November 13, 1997 (the
"Indenture") between the Company and LTCB Trust Company, as trustee (the
"Trustee"), and are part of a series of Debt Securities described in the
accompanying Prospectus Supplement and Prospectus. The MOPPRS will mature on
June 15, 2011 (the "Stated Maturity Date").
The MOPPRS will be senior unsecured obligations of the Company and will be
limited to $550,000,000 aggregate principal amount. Except in the limited
circumstances described herein, the MOPPRS are not subject to redemption prior
to the Remarketing Date at the option of the Company. See "-- Redemption" below.
The MOPPRS will bear interest at the annual interest rate of 6.4% to June
15, 2001 (the "Remarketing Date"). If the Remarketing Dealer elects to remarket
the MOPPRS, except in the limited circumstances described herein, (i) the MOPPRS
will be subject to mandatory tender to the Remarketing Dealer at 100% of the
principal amount thereof for remarketing on the Remarketing Date, on the terms
and subject to the conditions described herein, and (ii) on and after the
Remarketing Date, the MOPPRS will bear interest at the rate determined by the
Remarketing Dealer in accordance with the procedures set forth below (the
"Interest Rate to Maturity"). See "-- Tender of MOPPRS; Remarketing" below.
Under the circumstances described below, the MOPPRS are subject to
redemption by the Company from the Remarketing Dealer on the Remarketing Date.
See "-- Redemption" below. If the Remarketing Dealer for any reason does not
purchase all of the tendered MOPPRS on the Remarketing Date or elects not to
remarket the MOPPRS, or in certain other limited circumstances described herein,
the Company will be required to repurchase the MOPPRS from the Beneficial Owners
thereof on the Remarketing Date, at 100% of the principal amount thereof plus
accrued interest, if any. See "-- Repurchase" below.
The MOPPRS will bear interest from June 9, 1998, payable semiannually on
June 15 and December 15 of each year (each, a "MOPPRS Interest Payment Date"),
commencing December 15, 1998, to the persons in whose name the MOPPRS are
registered on the fifteenth calendar day (whether or not a Business Day)
immediately preceding the related MOPPRS Interest Payment Date (each, a "MOPPRS
Record Date"). Interest on the MOPPRS will be computed on the basis of a 360-day
year of twelve 30-day months. "Business Day" means any day other than a
Saturday, Sunday or a day on which banking institutions in The City of New York
are authorized or obligated by law, executive order or governmental decree to be
closed.
Interest payable on any MOPPRS Interest Payment Date and at the Stated
Maturity Date or date of earlier redemption or repurchase shall be the amount of
interest accrued from and including the next preceding MOPPRS Interest Payment
Date in respect of which interest has been paid or duly provided for (or from
and including June 9, 1998 if no interest has been paid or duly provided for
with respect to the
PS-3
<PAGE> 4
MOPPRS) to but excluding such MOPPRS Interest Payment Date or the Stated
Maturity Date or date of redemption or repurchase, as the case may be. If any
MOPPRS Interest Payment Date or the Stated Maturity Date or date of redemption
or repurchase of MOPPRS falls on a day that is not a Business Day, the payment
shall be made on the next Business Day with the same force and effect as if it
were made on the date such payment was due and no interest shall accrue on the
amount so payable for the period from and after such MOPPRS Interest Payment
Date or the Stated Maturity Date or date of earlier redemption or repurchase, as
the case may be.
The MOPPRS will be issued in denominations of $1,000 and integral multiples
thereof.
Tender of MOPPRS; Remarketing
The following description sets forth the terms and conditions of the
remarketing of the MOPPRS, in the event that the Remarketing Dealer elects to
purchase the MOPPRS and remarkets the MOPPRS on the Remarketing Date.
MANDATORY TENDER. Provided that the Remarketing Dealer gives notice to the
Company and the Trustee on a Business Day not more than 15 nor less than 5
Business Days prior to the Remarketing Date of its intention to purchase the
MOPPRS for remarketing (the "Notification Date"), each MOPPRS will be
automatically tendered, or deemed tendered, to the Remarketing Dealer for
purchase on the Remarketing Date, except in the circumstances described under
"-- Repurchase" below. The purchase price for the tendered MOPPRS to be paid by
the Remarketing Dealer will equal 100% of the principal amount thereof. See "--
Notification of Results; Settlement" below. When the MOPPRS are tendered for
remarketing, the Remarketing Dealer may remarket the MOPPRS for its own account
at varying prices to be determined by the Remarketing Dealer at the time of each
sale. From and after the Remarketing Date, the MOPPRS will bear interest at the
Interest Rate to Maturity. If the Remarketing Dealer elects to remarket the
MOPPRS, the obligation of the Remarketing Dealer to purchase the MOPPRS on the
Remarketing Date is subject, among other things, to the conditions that, since
the Notification Date, no material adverse change in the condition of the
Company and its subsidiaries, considered as one enterprise, shall have occurred
and that no Event of Default (as defined in the Indenture), or any event which,
with the giving of notice or passage of time, or both, would constitute an Event
of Default, with respect to the MOPPRS shall have occurred and be continuing. If
for any reason the Remarketing Dealer does not purchase all of the tendered
MOPPRS on the Remarketing Date, the Company will be required to repurchase the
MOPPRS from the Beneficial Owners thereof at a price equal to the principal
amount thereof plus all accrued and unpaid interest, if any, on the MOPPRS to
the Remarketing Date. See "-- Repurchase" below.
The Interest Rate to Maturity shall be determined by the Remarketing Dealer
by 3:30 p.m., New York City time, on the third Business Day immediately
preceding the Remarketing Date (the "Determination Date") to the nearest one
hundred-thousandth (0.00001) of one percent per annum and will be equal to
5.587% (the "Base Rate") plus the Applicable Spread (as defined below) which
will be based on the Dollar Price (as defined below) of the MOPPRS.
The "Applicable Spread" will be the lowest bid indication, expressed as a
spread (in the form of a percentage or in basis points) above the Base Rate,
obtained by the Remarketing Dealer on the Determination Date from the bids
quoted by five Reference Corporate Dealers (as defined below) for the full
aggregate principal amount of the MOPPRS at the Dollar Price, but assuming (i)
an issue date equal to the Remarketing Date, with settlement on such date
without accrued interest, (ii) a maturity date equal to the Stated Maturity Date
of the MOPPRS, and (iii) a stated annual interest rate, payable semiannually on
each MOPPRS Interest Payment Date, equal to the Base Rate plus the spread bid by
the applicable Reference Corporate Dealer. If fewer than five Reference
Corporate Dealers bid as described above, then the Applicable Spread shall be
the lowest of such bid indications obtained as described above. The Interest
Rate to Maturity announced by the Remarketing Dealer, absent manifest error,
shall be binding and conclusive upon the Beneficial Owners and Holders of the
MOPPRS, the Company and the Trustee.
"Dollar Price" means, with respect to the MOPPRS, the present value
determined by the Remarketing Dealer, as of the Remarketing Date, of the
Remaining Scheduled Payments (as defined below) discounted to
PS-4
<PAGE> 5
the Remarketing Date, on a semiannual basis (assuming a 360-day year consisting
of twelve 30-day months), at the Remarketing Treasury Rate (as defined below).
"Reference Corporate Dealers" means leading dealers of publicly traded debt
securities of the Company in The City of New York (which may include the
Remarketing Dealer or one of its affiliates) selected by the Remarketing Dealer
after consultation with the Company.
"Remarketing Treasury Rate" means, with respect to the Remarketing Date,
the rate per annum equal to the semiannual equivalent yield to maturity or
interpolated (on a day count basis) yield to maturity of the Remarketing
Comparable Treasury Issues (as defined below), assuming a price for the
Remarketing Comparable Treasury Issues (expressed as a percentage of its
principal amount), equal to the Remarketing Comparable Treasury Price (as
defined below) for such Remarketing Date.
"Remarketing Comparable Treasury Issues" means the United States Treasury
security or securities selected by the Remarketing Dealer as having an actual or
interpolated maturity or maturities comparable to the remaining term of the
MOPPRS being purchased.
"Remarketing Comparable Treasury Price" means, with respect to the
Remarketing Date, (a) the offer prices for the Remarketing Comparable Treasury
Issues (expressed in each case as a percentage of its principal amount) on the
Determination Date, as set forth on "Telerate Page 500" (or such other page as
may replace Telerate Page 500) or (b) if such page (or any successor page) is
not displayed or does not contain such offer prices on such Business Day,
(i) the average of the Remarketing Reference Treasury Dealer Quotations for such
Remarketing Date, after excluding the highest and lowest of such Remarketing
Reference Treasury Dealer Quotations, or (ii) if the Remarketing Dealer obtains
fewer than four such Remarketing Reference Treasury Dealer Quotations, the
average of all such Remarketing Reference Treasury Dealer Quotations. "Telerate
Page 500" means the display designated as "Telerate Page 500" on Dow Jones
Markets Limited (or such other page as may replace Telerate Page 500 on such
service) or such other service displaying the offer prices specified in
(a) above as may replace Dow Jones Markets Limited.
"Remarketing Reference Treasury Dealer Quotations" means, with respect to
each Remarketing Reference Treasury Dealer and the Remarketing Date, the offer
prices for the Remarketing Comparable Treasury Issues (expressed in each case as
a percentage of its principal amount) quoted to the Remarketing Dealer by such
Remarketing Reference Treasury Dealer by 3:30 p.m., New York City time, on the
Determination Date.
"Remarketing Reference Treasury Dealer" means each of Credit Suisse First
Boston Corporation, Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc (or
their respective affiliates which are primary U.S. Government securities
dealers) and their respective successors; provided, however, that if any of the
foregoing or their affiliates shall cease to be a primary U.S. Government
securities dealer in The City of New York (a "Primary Treasury Dealer"), the
Remarketing Dealer shall substitute therefor another Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to the MOPPRS, the
remaining scheduled payments of the principal thereof and interest thereon,
calculated at the Base Rate only, that would be due after the Remarketing Date
to and including the Stated Maturity Date, as determined by the Remarketing
Dealer; provided, however, that if the Remarketing Date is not a MOPPRS Interest
Payment Date, the amount of the next succeeding scheduled interest payment
thereon, calculated at the Base Rate only, will be reduced by the amount of
interest accrued thereon, calculated at the Base Rate only, to the Remarketing
Date.
NOTIFICATION OF RESULTS; SETTLEMENT. Provided the Remarketing Dealer has
previously notified the Company and the Trustee on the Notification Date of its
intention to purchase all tendered MOPPRS on the Remarketing Date, the
Remarketing Dealer will notify the Company, the Trustee and DTC by telephone,
confirmed in writing, by 4:00 p.m., New York City time, on the Determination
Date, of the Interest Rate to Maturity effective from and including the
Remarketing Date.
All of the tendered MOPPRS will be automatically delivered to the account
of the Trustee, by book-entry through DTC pending payment of the purchase price
therefor, on the Remarketing Date.
PS-5
<PAGE> 6
In the event that the Remarketing Dealer purchases the tendered MOPPRS on
the Remarketing Date, the Remarketing Dealer will make or cause the Trustee to
make payment to the DTC Participant of each tendering Beneficial Owner of
MOPPRS, by book-entry through DTC by the close of business on the Remarketing
Date against delivery through DTC of such Beneficial Owner's tendered MOPPRS, of
100% of the principal amount of the tendered MOPPRS that have been purchased for
remarketing by the Remarketing Dealer. If the Remarketing Dealer does not
purchase all of the MOPPRS on the Remarketing Date, it will be the obligation of
the Company to make or cause to be made such payment for the MOPPRS, as
described below under "-- Repurchase." In any case, the Company will make or
cause the Trustee to make payment of interest to each Beneficial Owner of MOPPRS
due on the Remarketing Date by book-entry through DTC by the close of business
on the Remarketing Date.
The transactions described above will be executed on the Remarketing Date
through DTC in accordance with the procedures of DTC, and the accounts of the
respective DTC Participants will be debited and credited and the MOPPRS
delivered by book entry as necessary to effect the purchases and sales thereof.
Transactions involving the sale and purchase of MOPPRS remarketed by the
Remarketing Dealer on and after the Remarketing Date will settle in immediately
available funds through DTC's Same-Day Funds Settlement System.
The tender and settlement procedures described above, including provisions
for payment by purchasers of MOPPRS in the remarketing or for payment to selling
Beneficial Owners of tendered MOPPRS, may be modified to the extent required by
DTC or to the extent required to facilitate the tender and remarketing of MOPPRS
in certificated form, if the book-entry system is no longer available for the
MOPPRS at the time of the remarketing. In addition, the Remarketing Dealer may,
with the consent of the Company in accordance with the terms of the Indenture,
modify the tender and settlement procedures set forth above in order to
facilitate the tender and settlement process.
As long as DTC's nominee holds the certificates representing any MOPPRS in
the book entry system of DTC, no certificates for such MOPPRS will be delivered
by any selling Beneficial Owner to reflect any transfer of such MOPPRS effected
in the remarketing. In addition, under the terms of the MOPPRS and the
Remarketing Agreement (described below), the Company has agreed that,
notwithstanding any provision to the contrary set forth in the Indenture, (i) it
will use its best efforts to maintain the MOPPRS in book-entry form with DTC or
any successor thereto and to appoint a successor depositary to the extent
necessary to maintain the MOPPRS in book-entry form, and (ii) it will waive any
discretionary right it otherwise has under the Indenture to cause the MOPPRS to
be issued in certificated form.
For further information with respect to transfers and settlement through
DTC, see "Description of Notes -- Book-Entry Notes" in the accompanying
Prospectus Supplement and "Description of Debt Securities -- Global Debt
Securities" in the accompanying Prospectus.
THE REMARKETING DEALER. The Company and the Remarketing Dealer have entered
into a Remarketing Agreement, the general terms and provisions of which are
summarized below.
The Remarketing Dealer will not receive any fees or reimbursement of
expenses from the Company in connection with the remarketing.
The Company will agree to indemnify the Remarketing Dealer against certain
liabilities, including liabilities under the Securities Act of 1933 (the "Act"),
arising out of or in connection with its duties under the Remarketing Agreement.
In the event that the Remarketing Dealer elects to remarket the MOPPRS as
described herein, the obligation of the Remarketing Dealer to purchase MOPPRS
from tendering Beneficial Owners of MOPPRS will be subject to several conditions
precedent set forth in the Remarketing Agreement, including, among other things,
the conditions that, since the Notification Date, no material adverse change in
the condition of the Company and its subsidiaries, considered as one enterprise,
shall have occurred and that no Event of Default (as defined in the Indenture),
or any event which, with the giving of notice or passage of time, or both, would
constitute an Event of Default, with respect to the MOPPRS shall have occurred
and be continuing. In
PS-6
<PAGE> 7
addition, the Remarketing Agreement will provide for the termination thereof, or
redetermination of the Interest Rate to Maturity, by the Remarketing Dealer on
or before the Remarketing Date, upon the occurrence of certain events as set
forth in the Remarketing Agreement.
No Holder or Beneficial Owner of any MOPPRS shall have any rights or claims
under the Remarketing Agreement or against the Remarketing Dealer as a result of
the Remarketing Dealer not purchasing such MOPPRS.
The Remarketing Agreement also provides that the Remarketing Dealer may
resign at any time as Remarketing Dealer, such resignation to be effective 10
days after the delivery to the Company and the Trustee of written notice of such
resignation. In such case, it shall be the sole obligation of the Company to
appoint a successor Remarketing Dealer.
The Remarketing Dealer, in its individual or any other capacity, may buy,
sell, hold and deal in any of the MOPPRS. The Remarketing Dealer may exercise
any vote or join in any action which any Beneficial Owner of MOPPRS may be
entitled to exercise or take with like effect as if it did not act in any
capacity under the Remarketing Agreement. The Remarketing Dealer, in its
individual capacity, either as principal or agent, may also engage in or have an
interest in any financial or other transaction with the Company as freely as if
it did not act in any capacity under the Remarketing Agreement.
Repurchase
In the event that (i) the Remarketing Dealer for any reason does not notify
the Company of the Interest Rate to Maturity by 4:00 p.m., New York City time,
on the Determination Date, or (ii) prior to the Remarketing Date, the
Remarketing Dealer has resigned and no successor has been appointed on or before
the Determination Date, or (iii) since the Notification Date, the Remarketing
Dealer terminates the Remarketing Agreement due to the occurrence of a material
adverse change in the condition of the Company and its subsidiaries, considered
as one enterprise, or an Event of Default, or any event which, with the giving
of notice or passage of time, or both, would constitute an Event of Default,
with respect to the MOPPRS, or any other event constituting a termination event
under the Remarketing Agreement, or (iv) the Remarketing Dealer elects not to
remarket the MOPPRS, or (v) the Remarketing Dealer for any reason does not
purchase all tendered MOPPRS on the Remarketing Date, the Company will
repurchase the MOPPRS as a whole on the Remarketing Date at a price equal to
100% of the principal amount of the MOPPRS plus all accrued and unpaid interest,
if any, on the MOPPRS to the Remarketing Date. In any such case, payment will be
made by the Company to the DTC Participant of each tendering Beneficial Owner of
MOPPRS, by book-entry through DTC by the close of business on the Remarketing
Date against delivery through DTC of such Beneficial Owner's tendered MOPPRS.
Redemption
If the Remarketing Dealer elects to remarket the MOPPRS on the Remarketing
Date, the MOPPRS will be subject to mandatory tender to the Remarketing Dealer
for remarketing on such date, in each case subject to the conditions described
above under "-- Tender of MOPPRS; Remarketing" and "-- Repurchase" and to the
Company's right to redeem the MOPPRS from the Remarketing Dealer as described in
the next sentence. The Company will notify the Remarketing Dealer and the
Trustee, not later than the Business Day immediately preceding the Determination
Date, if the Company irrevocably elects to exercise its right to redeem the
MOPPRS, in whole but not in part, from the Remarketing Dealer on the Remarketing
Date at the Optional Redemption Price.
The "Optional Redemption Price" shall be the greater of (i) 100% of the
principal amount of the MOPPRS and (ii) the Dollar Price, plus in either case
accrued and unpaid interest from the Remarketing Date on the principal amount
being redeemed to the date of redemption. If the Company elects to redeem the
MOPPRS, it shall pay the redemption price therefor in same-day funds by wire
transfer to an account designated by the Remarketing Dealer on the Remarketing
Date.
PS-7
<PAGE> 8
If the MOPPRS remain outstanding after the Remarketing Date, the MOPPRS
will be redeemable as a whole or in part at the option of the Company at any
time after such Remarketing Date, at a redemption price equal to the sum of (a)
the greater of (i) 100% of the principal amount thereof and (ii) the sum of the
present values of the remaining scheduled payments of principal and interest
thereon from the redemption date to the maturity date, computed by discounting
such payments, in each case, to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Redemption
Treasury Rate (as defined below), plus 25 basis points, plus (b) accrued and
unpaid interest on the principal amount thereof to the date of redemption.
"Redemption Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Redemption Comparable Treasury Issue, assuming a price for the Redemption
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Redemption Comparable Treasury Price for such redemption date.
"Redemption Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the Notes or the MOPPRS, as the case may be,
to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining terms of such Notes or
MOPPRS. "Independent Investment Banker" means one of the Notes Reference
Treasury Dealers or MOPPRS Reference Treasury Dealers, as the case may be,
appointed by the Trustee after consultation with the Company.
"Redemption Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for the Redemption
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third Business Day preceding such redemption date, as
set forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
Business Day, the average of the Redemption Reference Treasury Dealer Quotations
actually obtained by the Trustee for such redemption date.
"Redemption Reference Treasury Dealer Quotations" means, with respect to
each Notes Reference Treasury Dealer or MOPPRS Reference Treasury Dealer, as the
case may be, and any redemption date, the average, as determined by the Trustee,
of the bid and asked prices for the Redemption Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Notes Reference Treasury Dealer or MOPPRS
Reference Treasury Dealer, respectively, at 5:00 p.m. (New York City time) on
the third Business Day preceding such redemption date.
"MOPPRS Reference Treasury Dealer" means each of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, NationsBanc Montgomery Securities LLC, Chase
Securities Inc., Goldman, Sachs & Co. and SBC Warburg Dillon Reed Inc. and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a Primary Treasury Dealer, the Company may substitute therefor
another Primary Treasury Dealer.
"Notes Reference Treasury Dealer" means each of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, BancAmerica Robertson Stephens, Deutsche Bank
Securities Inc. and Salomon Brothers Inc and their respective successors;
provided, however, that if any of the foregoing shall cease to be a Primary
Treasury Dealer, the Company may substitute therefor another Primary Treasury
Dealer.
Notice of any redemption will be mailed at least 30 days but no more than
60 days before the redemption date to each holder of MOPPRS to be redeemed. If,
at the time notice of redemption is given, the redemption moneys are not held by
the Trustee, the redemption may be made subject to their receipt on or before
the date fixed for redemption and such notice shall be of no effect unless such
moneys are so received.
Upon payment of the redemption price, and after the redemption date
interest will cease to accrue on the MOPPRS or portions thereof called for
redemption.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Senior Notes
PS-8
<PAGE> 9
described in the accompanying Prospectus and Prospectus Supplement, to which
description reference is hereby made.
The 6.8% Notes due June 15, 2005 (the "Notes") are Senior Notes and Fixed
Rate Notes (each as defined in the accompanying Prospectus Supplement) issued
under the Indenture and are part of a series of Debt Securities described in the
accompanying Prospectus and Prospectus Supplement. The Notes will bear interest
at the rate per annum shown on the cover of the Pricing Supplement from June 9,
1998, or from the most recent date to which interest has been paid. Interest
will be payable semiannually on June 15 and December 15 of each year (each a
"Notes Interest Payment Date"), commencing on December 15, 1998, to the persons
in whose names the Notes are registered on the fifteenth calendar day (whether
or not a Business Day) immediately preceding the related Notes Interest Payment
Date. Interest payable at maturity will be payable to the person to whom
principal shall be payable. The Notes will mature on June 15, 2005. See
"Description of Notes" in the accompanying Prospectus Supplement.
The Notes will be redeemable as a whole or in part at the option of the
Company at any time, at a redemption price equal to the sum of (a) the greater
of (i) 100% of the principal amount of such Notes and (ii) the sum of the
present values of the remaining scheduled payments of principal and interest
thereon from the redemption date to the maturity date, computed by discounting
such payments, in each case, to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Redemption
Treasury Rate (as defined above), plus 25 basis points, plus (b) accrued and
unpaid interest on the principal amount thereof to the date of redemption.
The Notes will be issued in book-entry form through the facilities of DTC
in minimum denominations of $1,000 and integral multiples thereof. See
"Description of Notes -- Book-Entry Notes" in the accompanying Prospectus
Supplement.
Notice of any redemption will be mailed at least 30 days but no more than
60 days before the redemption date to each holder of Notes to be redeemed. If,
at the time notice of redemption is given, the redemption moneys are not held by
the Trustee, the redemption may be made subject to their receipt on or before
the date fixed for redemption and such notice shall be of no effect unless such
moneys are so received.
Upon payment of the redemption price, on and after the redemption date
interest will cease to accrue on the Notes or portions thereof called for
redemption.
CERTAIN COVENANTS
The Offered Securities contain the following covenants:
Limitations on Issuance or Disposition of Stock of Significant
Subsidiaries. The Company will not, nor will it permit any Significant
Subsidiary to, issue, sell or otherwise dispose of any shares of Capital Stock
(other than non-voting Preferred Stock) of any Significant Subsidiary, except
for (i) directors' qualifying shares; (ii) sales or other dispositions to the
Company or to one or more wholly owned Significant Subsidiaries; (iii) the sale
or other disposition of all or any part of the Capital Stock of any Significant
Subsidiary for consideration which is at least equal to the fair value of such
Capital Stock as determined by the Company's board of directors (acting in good
faith); or (iv) any issuance, sale, assignment, transfer or other disposition
made in compliance with an order of a court or regulatory authority of competent
jurisdiction, other than an order issued at the request of the Company or any
Significant Subsidiary.
Limitation on Liens. Except as provided below, neither the Company nor any
Significant Subsidiary may incur, issue, assume or guarantee any Indebtedness
secured by a Lien on any property or assets of the Company or any Significant
Subsidiary, or any shares of Capital Stock of any Significant Subsidiary,
without effectively providing that the Offered Securities (together with, if the
Company shall so determine, any other Indebtedness which is not subordinated to
the Offered Securities) shall be secured equally and ratably with (or prior to)
such Indebtedness, so long as such Indebtedness shall be so secured; provided,
however, that this covenant shall not apply to Indebtedness secured by (i) Liens
existing on the date of this Pricing Supplement; (ii) Liens on property of, or
on any shares of stock of, any corporation existing at the time such corporation
becomes a Significant Subsidiary or merges into or consolidates with the Company
or a Significant Subsidiary; (iii) Liens on property or on shares of stock
existing at the time of acquisition thereof by the Company or any Significant
Subsidiary; (iv) Liens to secure the financing of the acquisition, construction
or improvement of
PS-9
<PAGE> 10
property, or the acquisition of shares of stock by the Company or any
Significant Subsidiary, provided that such Liens are created not later than one
year after such acquisition or, in the case of property, no later than one year
after completion of construction or commencement of commercial operation,
whichever is later, are limited to the property acquired, constructed or
improved or the shares of stock acquired and do not secure indebtedness in
excess of the cost of such acquisition, construction or improvement; (v) Liens
in favor of the Company or any Subsidiary; (vi) Liens in favor of, or required
by, governmental authorities; and (vii) any extension, renewal or replacement as
a whole or in part of any Lien referred to in the foregoing clauses (i) to (vi)
inclusive; provided, however, that (a) such extension, renewal or replacement
Lien shall be limited to all or a part of the same property or shares of stock
that secured the Lien extended, renewed or replaced and (b) the Indebtedness
secured by such Lien at such time is not so increased.
The restrictions in the immediately preceding paragraph do not apply if,
immediately after the incurrence, issuance, assumption or guarantee of any
Indebtedness secured by a Lien, the aggregate principal amount of such secured
Indebtedness (other than Indebtedness secured by Liens described in clauses (i)
to (vii), inclusive, of the immediately preceding paragraph) would not exceed
10% of Consolidated Capitalization.
Neither the Offered Securities nor the Indenture contain any provisions
other than the foregoing which will restrict the Company from incurring,
assuming or becoming liable with respect to any indebtedness or other
obligations, whether secured or unsecured, or from paying dividends or making
other distributions on its capital stock or purchasing or redeeming its capital
stock. Neither the Offered Securities nor the Indenture contain any financial
ratios or specified levels of net worth or liquidity to which the Company must
adhere. In addition, neither the Offered Securities nor the Indenture contain
any provision which would require the Company to repurchase or redeem or
otherwise modify the terms of any of the Offered Securities upon a change in
control or other events involving the Company which may adversely affect the
creditworthiness of the Offered Securities.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms used in the Offered
Securities.
"Capital Lease Obligations" of a Person means any obligation that is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such Person prepared in accordance with generally accepted
accounting principles; the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; and the Stated Maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interest in
(however designated) corporate stock, including any Preferred Stock.
"Consolidated Capitalization" means the sum of the Company's consolidated
shareholders' equity, redeemable preferred stock and preferred securities in any
trust, partnership, corporation or other entity of which more than 50% of the
voting equity is owned directly or indirectly by the Company, including, without
limitation, the trust securities issued by Conseco Financing Trust I, Conseco
Financing Trust II, Conseco Financing Trust III and Conseco Financing Trust IV.
"Indebtedness" means: (i) any liability of any Person (1) for borrowed
money, or under any reimbursement obligation relating to a letter of credit
(other than letters of credit obtained in the ordinary course of business), or
(2) evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than accounts payable or other
indebtedness to trade creditors arising in the ordinary course of business), or
(3) for the payment of money relating to a Capital Lease Obligation; (ii) any
liability of others described in the preceding clause (i) that the Person has
guaranteed or that is otherwise its legal liability; and (iii) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of types referred to in clauses (i) and (ii) above.
PS-10
<PAGE> 11
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement and any lease in the nature thereof).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock or limited liability company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Significant Subsidiary" means any Subsidiary with net earnings which
constituted at least 20% of the Company's consolidated total net earnings, as
determined as of the date of the Company's most recently prepared quarterly
financial statements for the 12-month period then ended.
"Stated Maturity," when used with respect to any security or any
installment of interest on any security, means the date specified in such
security as the fixed date on which the principal of such security or such
installment of interest, respectively, is finally due and payable, except as
otherwise provided in the case of Capital Lease Obligations.
"Subsidiary" means a corporation of which a majority of the Capital Stock
having voting power under ordinary circumstances to elect a majority of the
board of directors is owned directly or indirectly by the Company or by one or
more Subsidiaries, or by the Company and one or more Subsidiaries.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS OF THE MOPPRS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the MOPPRS is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations, Internal Revenue Service ("IRS") rulings and pronouncements and
administrative and judicial decisions currently in effect, all of which are
subject to change (possibly with retroactive effect) or possible differing
interpretations. This summary deals only with MOPPRS held as capital assets
(within the meaning of section 1221 of the Code) and does not purport to deal
with persons in special tax situations, such as financial institutions,
insurance companies, regulated investment companies, real estate investment
trusts, dealers in securities or currencies, persons holding MOPPRS as a hedge
against currency risk or as a position in a "straddle" or conversion
transaction, or persons whose functional currency is not the U.S. dollar.
PROSPECTIVE INVESTORS CONSIDERING THE PURCHASE OF THE MOPPRS SHOULD CONSULT
THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF UNITED STATES FEDERAL
INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES OF
THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE MOPPRS ARISING UNDER THE LAWS OF
ANY OTHER TAXING JURISDICTION.
As used herein, the term "U.S. Holder" means a Beneficial Owner of a MOPPRS
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof (other than a partnership that is not treated as a United
States person under any applicable Treasury regulations), (iii) an estate whose
income is subject to United States Federal income tax regardless of its source,
or (iv) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust, or
(v) any other person whose income or gain in respect of a MOPPRS is effectively
connected with the conduct of a United States trade or business. Notwithstanding
the preceding sentence, to the extent provided in Treasury regulations, certain
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons also will be a U.S. Holder. As used herein, the term "non-U.S. Holder"
means a Beneficial Owner of a MOPPRS that is not a U.S. Holder.
The United States Federal income tax treatment of debt obligations such as
the MOPPRS is not entirely certain and depends, in part, on whether the MOPPRS
are treated as maturing on their Stated Maturity Date
PS-11
<PAGE> 12
(i.e., 2011) or on the Remarketing Date. Because the MOPPRS are subject to
mandatory tender on the Remarketing Date, the Company intends to treat the
MOPPRS as maturing on the Remarketing Date for United States Federal income tax
purposes. By purchasing the MOPPRS, the U.S. Holder agrees to follow such
treatment for United States Federal income tax purposes. Based on such
treatment, interest on the MOPPRS should constitute "qualified stated interest"
and generally should be taxable to a U.S. Holder as ordinary interest income at
the time such payments are accrued or received (in accordance with the U.S.
Holder's regular method of accounting). Under the foregoing, if the MOPPRS are
issued to the Holder at par value or alternatively, the excess of the par value
over the issue price does not exceed the statutory de minimis amount (generally
1/4 of 1% of the MOPPRS' stated redemption price at the Remarketing Date
multiplied by the number of complete years to the Remarketing Date from its
issue date), the MOPPRS will not be treated as having original issue discount.
If the MOPPRS are issued at a discount greater than the statutory de
minimis amount, a Holder must include original issue discount in income as
ordinary interest for United States Federal income tax purposes as it accrues
under a constant yield method in advance of receipt of the cash payments
attributable to such income, regardless of the U.S. Holder's regular method of
accounting. See "Certain United States Federal Income Tax Considerations --
Original Issue Discount."
Under the foregoing treatment, upon the sale, exchange or retirement of a
MOPPRS, a U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement
(other than amounts representing accrued and unpaid interest) and such U.S.
Holder's adjusted tax basis in the MOPPRS. A U.S. Holder's adjusted tax basis in
a MOPPRS generally will equal such U.S. Holder's initial investment in the
MOPPRS increased by any original issue discount included in income (and accrued
market discount, if any, if the U.S. Holder has included such market discount in
income) and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with respect to
such MOPPRS.
There can be no assurance that the Internal Revenue Service ("IRS") will
agree with the Company's treatment of the MOPPRS, and it is possible that the
IRS could assert another treatment. For instance, it is possible that the IRS
could seek to treat the MOPPRS as maturing on the Stated Maturity Date. In that
event, because the Interest Rate to Maturity will not be determined until the
Determination Date, the MOPPRS would be treated as having contingent interest
under the Treasury regulations governing debt instruments that provide for
contingent payments (the "Contingent Payment Regulations"). In that event, the
Company would be required to construct a projected payment schedule for the
MOPPRS, based upon the Company's current borrowing costs for comparable
noncontingent debt instruments of the Company from which an estimated yield on
the MOPPRS would be calculated. A U.S. Holder would be required to include in
income original issue discount in an amount equal to the product of the adjusted
issue price of the MOPPRS at the beginning of each interest accrual period and
the estimated yield of the MOPPRS. In general, for these purposes, a MOPPRS'
adjusted issue price would equal the MOPPRS's issue price increased by the
interest previously accrued on the MOPPRS, and reduced by all payments made on
the MOPPRS. As a result of the application of the Contingent Payment
Regulations, it is possible that a U.S. Holder would be required to include
interest in income in excess of actual cash payments received for certain
taxable years.
In addition, the character of any gain or loss, upon the sale or exchange
of a MOPPRS (including a sale pursuant to the mandatory tender on the
Remarketing Date) by a U.S. Holder, will differ if the MOPPRS were treated as
contingent payment obligations. Any such taxable gain generally would be treated
as ordinary income. Any such taxable loss generally would be ordinary to the
extent of previously accrued original issue discount, and any excess would
generally be treated as capital loss.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to Federal income taxes on payments
of principal, premium (if any) or interest (including original issue discount,
if any) on a MOPPRS, unless such non-U.S. Holder is a direct or indirect 10% or
greater shareholder of the Company, a controlled foreign corporation related to
the Company or a bank receiving interest described in section 881(c)(3)(A) of
the Code. To qualify for the exemption from taxation, the last United States
payor in the chain of payment prior to payment to a non-U.S.
PS-12
<PAGE> 13
Holder (the "Withholding Agent") must have received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the Beneficial Owner of the
MOPPRS under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the Beneficial Owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the Beneficial Owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a MOPPRS is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by the
Beneficial Owner to the organization or institution. The Treasury Department is
considering implementation of further certification requirements aimed at
determining whether the issuer of a debt obligation is related to holders
thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes gain upon retirement or disposition of a MOPPRS,
provided the gain is not effectively connected with the conduct of a trade or
business in the United States by the non-U.S. Holder. Certain other exceptions
may be applicable, and a non-U.S. Holder should consult its tax advisor in this
regard.
The MOPPRS will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the Company
or, at the time of such individual's death, payments in respect of the MOPPRS
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of Federal income tax at a rate of 31% may apply to
payments made in respect of the MOPPRS to registered owners who are not "exempt
recipients" and who fail to provide certain identifying information (such as the
registered owner's taxpayer identification number) in the required manner.
Generally, individuals are not exempt recipients, whereas corporations and
certain other entities generally are exempt recipients. Payments made in respect
of the MOPPRS to a U.S. Holder must be reported to the IRS, unless the U.S.
Holder is an exempt recipient or establishes an exemption. Compliance with the
identification procedures described in the preceding section would establish an
exemption from backup withholding for those non-U.S. Holders who are not exempt
recipients.
In addition, upon the sale of a MOPPRS to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
Beneficial Owner would be allowed as a refund or a credit against such
Beneficial Owner's United States Federal income tax provided the required
information is furnished to the IRS.
FINAL WITHHOLDING REGULATIONS
The Treasury Department issued final regulations (the "Final Regulations")
which make certain modifications to the withholding, backup withholding and
information reporting rules described above. The Final Regulations attempt to
unify certification requirements and modify reliance standards. The Final
Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the Final Regulations.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain restrictions on (a) employee benefit plans (as
defined in Section 3(3) of ERISA), (b) plans described
PS-13
<PAGE> 14
in section 4975(e)(1) of the Code, including individual retirement accounts or
Keogh plans, (c) any entities whose underlying assets include plan assets by
reason of a plan's investment in such entities (each a "Plan") and (d) persons
who have certain specified relationships to such Plans ("Parties-in-Interest"
under ERISA and "Disqualified Persons" under the Code). ERISA also imposes
certain duties on persons who are fiduciaries of Plans subject to ERISA and
prohibits certain transactions between a Plan and Parties-in-Interest or
Disqualified Persons with respect to such Plans.
The Company and the Remarketing Dealer, because of their activities or the
activities of their respective affiliates, may be considered to be
Parties-in-Interest or Disqualified Persons with respect to certain Plans. If
the MOPPRS are acquired by a Plan with respect to which the Company or the
Remarketing Dealer is, or subsequently becomes, a Party-in-Interest or
Disqualified Person, the purchase or holding of MOPPRS or their sale to the
Remarketing Dealer could be deemed to be a direct or indirect violation of the
Prohibited Transaction provisions of ERISA or the Code unless such transaction
were subject to one or more statutory or administrative exemptions such as
Prohibited Transaction Class Exemption ("PTCE") 75-1, which exempts certain
transactions involving employee benefit plans and certain broker-dealers,
reporting dealers and banks; PTCE 90-1, which exempts certain transactions
between insurance company pooled separate accounts and Parties-in-Interest or
Disqualified Persons; PTCE 91-38, which exempts certain transactions between
bank collective investment funds and Parties-in-Interest or Disqualified
Persons; PTCE 84-14, which exempts certain transactions effected on behalf of a
Plan by a "qualified professional asset manager," PTCE 95-60, which exempts
certain transactions between insurance company general accounts and
Parties-in-Interest or Disqualified Persons; or PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager." Even if the conditions specified in one or more of these exemptions
are met, the scope of relief provided by these exemptions will not necessarily
cover all acts that might be construed as prohibited transactions.
Insurance companies considering an investment in MOPPRS should note that,
based on the reasoning of the United States Supreme Court in John Hancock Life
Ins. v. Harris Trust and Sav. Bank, 114 S. Ct. 517 (1993), an insurance
company's general account may be deemed to include assets of the Plans investing
in the general account (e.g., through the purchase of an annuity contract).
Moreover, the Small Business Job Protection Act of 1996 added new Section 401(c)
of ERISA relating to the status of the assets of insurance company general
accounts under ERISA and Section 4975 of the Code. Pursuant to Section 401(c),
the Department of Labor issued proposed regulations (the "Proposed General
Account Regulations") in December, 1997, with respect to insurance policies
issued on or before December 31, 1998 that are supported by an insurer's general
account. The Proposed General Account Regulations are intended to provide
guidance on which assets held by the insurer constitute "plan assets" of a Plan
for purposes of the fiduciary responsibility provisions of ERISA and Section
4975 of the Code. The "plan assets" status of insurance company separate
accounts is unaffected by new Section 401(c) of ERISA, and separate account
assets continue to be treated as the "plan assets" of a Plan invested in a
separate account.
Accordingly, prior to making an investment in the MOPPRS, the Plan
fiduciaries with the authority to make such investments should determine whether
the Company or the Remarketing Dealer is a Party-in-Interest or Disqualified
Person with respect to such Plan and, if so, whether such transaction is subject
to one or more statutory or administrative exemptions, including those described
above.
Such fiduciaries also should consult with their legal advisers concerning
the application of ERISA and the Code to and the potential consequences of such
investments with respect to their specific circumstances. Moreover, each such
fiduciary should take into account, among other considerations, whether under
the general fiduciary standards of investment prudence and diversification an
investment in the MOPPRS is appropriate for the Plan, taking into account the
overall investment policy of the Plan and the composition of the Plan's
investment portfolio.
SUPPLEMENTAL PLAN OF DISTRIBUTION
THE MOPPRS
Subject to the terms and conditions set forth in the Distribution Agreement
(as supplemented by a terms agreement dated as of the date hereof and relating
to the MOPPRS, the "MOPPRS Distribution Agree-
PS-14
<PAGE> 15
ment"), between the Company and each of the underwriters named below, the
Company has agreed to sell to each of the underwriters named below (the "MOPPRS
Underwriters"), and each of the MOPPRS Underwriters has severally agreed to
purchase from the Company, the respective principal amount of the MOPPRS set
forth opposite its name below at a purchase price of 99.556% of such principal
amount and, in addition, Salomon Brothers Inc has agreed to pay certain fees to
the Company under the Remarketing Agreement.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER MOPPRS
- ----------- ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $140,000,000
NationsBanc Montgomery Securities LLC....................... 140,000,000
Chase Securities Inc........................................ 90,000,000
Goldman, Sachs & Co......................................... 90,000,000
SBC Warburg Dillon Read Inc................................. 90,000,000
------------
Total.......................................... $550,000,000
============
</TABLE>
In the MOPPRS Distribution Agreement, the MOPPRS Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
MOPPRS offered hereby if any are purchased. The MOPPRS Underwriters have advised
the Company that the MOPPRS Underwriters propose to offer the MOPPRS from time
to time for sale in negotiated transactions or otherwise, at prices relating to
prevailing market prices determined at the time of sale. The MOPPRS Underwriters
may effect such transactions by selling MOPPRS to or through dealers and such
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the MOPPRS Underwriters and any purchasers of
MOPPRS for whom they may act as agent. The MOPPRS Underwriters and any dealers
that participate with the MOPPRS Underwriters in the distribution of the MOPPRS
may be deemed to be underwriters, and any discounts or commissions received by
them and any profit on the resale of MOPPRS by them may be deemed to be
underwriting compensation.
The MOPPRS Underwriters are permitted to engage in certain transactions
that maintain or otherwise affect the price of the MOPPRS. Such transactions may
include over-allotment transactions and purchases to cover short positions
created by the MOPPRS in connection with the offering. If the MOPPRS
Underwriters create a short position in the MOPPRS in connection with the
offering, i.e., if they sell MOPPRS in an aggregate principal amount exceeding
that set forth on the cover page of the Pricing Supplement, the MOPPRS
Underwriters may reduce that short position by purchasing MOPPRS in the open
market.
In general, purchases of a security to reduce a short position could cause
the price of the security to be higher than it might be in the absence of such
purchases.
Neither the Company nor the MOPPRS Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the MOPPRS. In addition, neither the
Company nor the MOPPRS Underwriters make any representation that the MOPPRS
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
In the ordinary course of business, the MOPPRS Underwriters and their
affiliates have engaged and may in the future engage in investment banking or
commercial banking transactions with the Company and certain of its affiliates.
The MOPPRS are a new issue of securities with no established trading
market. The Company has been advised by the MOPPRS Underwriters that they intend
to make a market in the MOPPRS, but they are not obligated to do so and may
discontinue such market making at any time without notice. No assurance can be
given as to the development or liquidity of a trading market for the MOPPRS.
The Company has agreed to indemnify the MOPPRS Underwriters against certain
liabilities under the Act, or to make contribution to certain payments in
respect thereof.
PS-15
<PAGE> 16
THE NOTES
Subject to the terms and conditions set forth in the Distribution Agreement
(as supplemented by a terms agreement dated as of the date hereof and relating
to the Notes, the "Notes Distribution Agreement"), between the Company and each
of the underwriters named below (the "Notes Underwriters" and, together with the
MOPPRS Underwriters, the "Underwriters"), the Company has agreed to sell to each
of the Notes Underwriters, and each of the Notes Underwriters has severally
agreed to purchase, the respective principal amount of the Notes set forth
opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
- ----------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $ 50,000,000
BancAmerica Robertson Stephens.............................. 50,000,000
Deutsche Bank Securities Inc. .............................. 50,000,000
First Union Capital Markets, a division of Wheat First
Securities, Inc. ......................................... 50,000,000
Salomon Brothers Inc ....................................... 50,000,000
------------
Total.......................................... $250,000,000
============
</TABLE>
In the Notes Distribution Agreement, the several Notes Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the Notes offered hereby if any are purchased.
The Notes Underwriters have advised the Company that they propose initially
to offer the Notes directly to the public at the public offering price set forth
on the cover page of this Pricing Supplement, and to certain dealers at such
price less a concession not in excess of .375% of the principal amount per Note.
The Notes Underwriters may allow, and such dealers may reallow, a discount not
in excess of .25% of the principal amount per Note to certain other dealers.
After the initial public offering of the Notes, the public offering price,
concession and discount may be changed.
The Notes Underwriters are permitted to engage in certain transactions that
stabilize the price of the Notes. Such transactions consist of bids or purchases
for the purpose of pegging, fixing or maintaining the price of the Notes. If the
Notes Underwriters create a short position in the Notes in connection with the
offering, i.e., if they sell Notes in an aggregate principal amount exceeding
that set forth on the cover page of this Pricing Supplement, the Notes
Underwriters may reduce that short position by purchasing Notes in the open
market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the Company nor the Notes Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In addition, neither the
Company nor the Notes Underwriters make any representation that the Notes
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
In the ordinary course of business, the Notes Underwriters and their
affiliates have engaged and may in the future engage in investment banking and
commercial banking transactions with the Company and certain of its affiliates.
The Notes are a new issue with no established trading market. The Company
has been advised by the Notes Underwriters that they intend to make a market in
the Notes, but they are not obligated to do so and may discontinue such market
making at any time without notice. No assurance can be given as to the
development or liquidity of a trading market for the Notes.
The Company has agreed to indemnify the Notes Underwriters against certain
liabilities under the Act, or to make contribution to certain payments in
respect thereof.
PS-16
<PAGE> 17
EXPERTS
The consolidated financial statements of the Company at December 31, 1997
and 1996, and for each of the three years in the period ended December 31, 1997,
incorporated by reference in the accompanying Prospectus, have been audited by
Coopers & Lybrand L.L.P., independent accountants, as set forth in their report
thereon incorporated by reference herein, and are incorporated by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Green Tree Financial Corporation
at December 31, 1997 and 1996, and for each of the three years in the period
ended December 31, 1997, incorporated by reference in the accompanying
Prospectus, have been audited by KPMG Peat Marwick LLP, independent auditors, as
set forth in their report thereon incorporated by reference herein, and are
incorporated by reference in reliance upon such report, given upon authority of
such firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the Company
by John J. Sabl, Executive Vice President, General Counsel and Secretary of the
Company, and for the Underwriters by Sidley & Austin, Chicago, Illinois. In
rendering their opinion, Sidley & Austin will rely as to matters of Indiana law
on the opinion of Mr. Sabl. Certain other matters with respect to the offering
will be passed upon for the Company by Locke Reynolds Boyd & Weisell,
Indianapolis, Indiana, and by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited
liability partnership including professional corporations, New York, New York.
Mr. Sabl is a full-time employee and owns 75,000 shares, and has options to
purchase 450,000 shares, of Common Stock of the Company. Sidley & Austin
provides legal services to the Company in certain other matters.
PS-17
<PAGE> 18
===============================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PRICING SUPPLEMENT, THE ACCOMPANYING PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PRICING SUPPLEMENT,
THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PRICING SUPPLEMENT, THE ACCOMPANYING PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR
ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PRICING SUPPLEMENT, THE ACCOMPANYING PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRICING SUPPLEMENT
Use of Proceeds............................ PS-3
Description of the Offered Securities...... PS-3
Certain United States Federal Income Tax
Considerations of the MOPPRS............. PS-11
ERISA Considerations....................... PS-13
Supplemental Plan of Distribution.......... PS-14
Experts.................................... PS-17
Legal Matters.............................. PS-17
PROSPECTUS SUPPLEMENT
Cautionary Statements Regarding Forward-
Looking Statements....................... S-2
Risk Factors Relating to the Notes......... S-2
Use of Proceeds............................ S-5
Description of Notes....................... S-5
Special Provisions Relating to Foreign
Currency Notes........................... S-21
Certain United States Federal Income Tax
Considerations........................... S-23
Supplemental Plan of Distribution.......... S-38
Legal Matters.............................. S-39
PROSPECTUS
Available Information...................... 3
Incorporation of Certain Documents By
Reference................................ 4
The Company................................ 5
The Conseco Trusts......................... 5
Use of Proceeds............................ 6
Ratios of Earnings to Fixed Charges,
Earnings to Fixed Charges and Preferred
Stock Dividends and Earnings to Fixed
Charges, Preferred Stock Dividends and
Distributions on Company-Obligated
Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts.......... 6
Description of Debt Securities............. 7
Description of Capital Stock............... 15
Description of Depositary Shares........... 18
Description of Warrants.................... 22
Description of Preferred Securities of the
Conseco Trusts........................... 22
Description of Trust Guarantees............ 23
Plan of Distribution....................... 26
Legal Matters.............................. 28
Experts.................................... 28
</TABLE>
===============================================================
===============================================================
$800,000,000
CONSECO, INC.
$550,000,000
6.4% MANDATORY PAR PUT
REMARKETED SECURITIES(SM)
("MOPPRS(SM)")
DUE JUNE 15, 2011
$250,000,000
6.8% NOTES DUE JUNE 15, 2005
-------------------------
PRICING SUPPLEMENT
-------------------------
MANAGERS OF THE MOPPRS
Joint Lead Managers
MERRILL LYNCH & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
SBC WARBURG DILLON READ INC.
-------------------------
MANAGERS OF THE NOTES
MERRILL LYNCH & CO.
BANCAMERICA ROBERTSON STEPHENS
DEUTSCHE BANK SECURITIES
FIRST UNION CAPITAL MARKETS
SALOMON SMITH BARNEY
JUNE 4, 1998
"MANDATORY PAR PUT REMARKETED
SECURITIES(SM)" AND "MOPPRS(SM)" ARE
SERVICE MARKS OWNED BY
MERRILL LYNCH & CO., INC.
===============================================================
