Conseco raising capital; Paulson & Co. takes stake in insurer

Insurance provider Conseco Inc. said Wednesday it has set a price on its private offering of $293 million in debentures as part of its plan to strengthen its capital position.

The company said its convertible senior debentures due 2016 will pay 7 percent interest per year. The debentures will be eligible to be converted into common stock after June 30, 2013.

Conseco said the offering is part of a broader capital raising plan announced on Tuesday. Under the plan, the company will make a stock offering that will generate about $200 million in gross proceeds. A separate offering will give investment bank Paulson & Co. a 9.9 percent share in the company.

On Wednesday, Conseco said an unnamed initial purchaser of the debentures will resell the debentures to “a number of qualified buyers.” Paulson will purchase up to $200 million of the debentures, the company said.

Shares of Conseco surged after the announcement. The stock gained $1.20, or 24 percent, to $6.19 in morning trading.