CNO Financial Prices Credit Notes - Analyst Blog

In order to retire the existing senior credit facility, CNO Financial Group Inc. (CNO) has priced its senior secured notes together with the new senior secured credit facility and CNO Financial's available cash.

CNO Financial has priced its $275 million principal amount of 9.0% senior secured notes due in January 2018 at par. The 2018 debt will be offered to qualified institutional buyers as per Rule 144A under the Securities Act of 1933, and the transaction process is expected to close on December 21, 2010.

Earlier, CNO Financial planned to sell $300 million of senior secured notes due in 2017 and agreed to borrow a new $325 million credit line, which would mature in 2016, replacing the $652 million senior secured facility due 2013.

However, the deal size was reduced and the company has now agreed to sell $275 million of senior secured credit notes, due in 2018. Further, to pay down the existing senior credit line, CNO Financial will borrow $375 million under the new senior secured credit facility, and will use the net sale proceeds along with the available cash of the company.

Morgan Stanley (MS) and Barclays PLC (BCS) will act as the joint bookrunning managers for the sale.

We believe that the debt extension is expected to increase CNO Financial's capital flexibility and operating leverage by reducing its financial leverage. CNO Financial's debt-to-total capital ratio improved to 20.8% as of September 30, 2010 from 21.5% at the end of December 31, 2009.

The refinancing decision will help the company effectively utilize funds and tap growth opportunities.

 
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