Conseco's (CNC) - Get Report free-falling stock price suggests that investors increasingly believe the Carmel, Ind.-based insurer and lender is fast running out of cash.

Conseco's reponse? The company fires off press releases saying it has enough money to meet its debts -- but doesn't include the sort of hard numbers that would dispel the liquidity fears. As a result, some investors are looking at Conseco's obligations and saying that, short of a large cash injection from the planned sale of its lending unit,

Conseco Finance

, the company is dangerously strapped for cash.

Pleading

Conseco declines requests for comment. But it is pleading its case in recent releases. "We are confident that we have adequate liquidity to fund loan originations and meet other cash needs during" the sale of Conseco Finance, the company said in an April 5 press release. The company then said in a release Monday it could pay back "the approximately $966 million debt" of Conseco's parent company that "we are required to either renew or repay late this year."

But a hedge fund manager who requested anonymity says that the Conseco holding company's expenses this year are nearly three times its inflows, adding: "This company could blow." (His fund has sold Conseco shares short, hoping to profit from any decline in them.)

He calculates that in 2000, Conseco's holding company will have around $950 million in outflows, comprising some $790 million in payments on debt and debtlike securities, $115 million in stock dividend payments and around $50 million in holding company expenses. He contends that Conseco's insurance subsidiaries can pay, at the very most, $350 million to the parent company this year, and he says that Conseco Finance isn't in a position to pay any profits up to the parent.

The hedge fund manager believes things could get particularly tight for the company this quarter, as interest payments spike. He estimates Conseco's parent has to make debt payments totaling $176 million this quarter on debt and debtlike securities, up from an estimated $76 million last quarter. On April 15 alone, the company has to make payments totaling $44 million, he says. Perhaps coincidentally, that is the day Conseco expects to make its late filing of its annual report.

Conseco's shares have fallen more than 70% since the beginning of the year. And since March 31, when the company announced a $350 million charge to earnings and its intention to sell Conseco Finance, its stock has plunged 40%, even after Monday's 13% jump prompted by a press release. At midafternoon, the stock was up 7/8 to 8 1/8, giving Conseco a market cap of $2.68 billion and a trailing price-to-earnings ratio of 2.5.

Breakdown

The most recent breakdown of Conseco's debts was in a prospectus for a February bond offering. Although the offering took place over a month into 2000, the company didn't supply year-end 1999 debt data in the prospectus, instead dating it Sept. 30.

According to debt data in the prospectus (below is an edited version), Conseco has $7.1 billion in debt, and $2.6 billion in preferred securities that resemble bonds. So what clues can be derived from Conseco's debt position and its money-raising activities?

First, it appears some of Conseco's bankers are getting wary. For example, unnamed banks recently didn't renew a $500 million credit that was collateralized with so-called interest-only securities held at Conseco Finance (for a description of what these are, see this

piece). It was these securities that were subject to the $350 million charge, which took nearly a third out of 1999 net income. The I/O collateralized credit was retired with proceeds from the February corporate bond offering, which raised $800 million.

Kathy Shanley, a corporate debt analyst at

Gimme Credit

, asked in a research note: "Did the bankers know something the corporate market didn't?" (Gimme Credit doesn't do any underwriting.)

Renewal

So if some creditors appear to be getting nervous, what other imminent or current credits may the company be finding it hard to renew? Almost certainly, much of the first credit in the table -- $1.1 billion bank credit facilities -- comes up for renewal this year. And the second item -- $1.8 billion in master repurchase agreements -- is extended quarterly by mutual agreement with lenders. The third item -- $250 million of notes owed to

Leucadia

(LUK)

, an insurance firm -- also needs to be watched. While on paper those notes don't mature until 2003, Conseco, for unstated reasons, repaid $150 million of them to Leucadia last year. Leucadia didn't immediately comment.

Also, Conseco may have to pony up around $60 million to investment bank

Warburg Dillon Read

at the end of June if its stock price stays around these levels, says the hedge fund manager. Warburg essentially made Conseco a $90 million loan last year in exchange for Conseco stock. (Warburg effectively paid Conseco just more than $29 for the shares; if the price is below that when the deal matures, Conseco has agreed to make up the difference to Warburg, first by issuing a set number of new shares, and if these aren't sufficient, which they aren't at current prices, then cash has to be paid.)

In addition, Conseco's two large Texas-based insurance subsidiaries may be prevented from paying cash to the parent company in 2000, says one insurance analyst who covers Conseco and requested anonymity. (His firm has done underwriting for Conseco.)

He notes that Conseco's Texas companies paid up only a small portion of the $157 million they appeared able to pay in 1999. He says this may be because the

Texas Insurance Department

or TDI, stopped Conseco from paying the full amount. He notes that one of the subsidiaries,

Bankers National

, owns 28.5 million shares in Conseco, which, he claims, can't have helped the financial standing of the company. The TDI didn't comment.