Conseco Finance Chief Bolts

Embattled lender loses CFO; will hope follow? Moody's threatens to cut company's debt rating, too. Also: National Steel finally gets a finance dire...
Jennifer CaplanMarch 11, 2002

>> Chuck Chokel, CFO at Conseco Inc., the loan company that’s currently carrying a lot of debt, unexpectedly announced his resignation late last week… Chokel had been at Conseco for just under a year… Company’s share price fell 20 percent on Thursday after the departure was made public… Day before Chokel’s resignation, Moody’s warned it would slash Conseco’s junk credit ratings two or more notches—unless management can come up with enough cash to pay off some of the company’s $6 billion in debt… Conseco faces some $1.4 billion coming due this year alone… Management says it needs to raise between $300 million and $410 million this year through asset sales, capital-markets activity to pay off those obligations… Moody’s not so sure company can pull it off… Corporate rater notes that “fragile economic environment” could very well keep Conseco from raising all the cash it needs… Moody’s has given Conseco until March 31 to present PricewaterhouseCoopers with a cash plan… PwC may then issue an “unqualified” opinion on the company’s 2001 financial statements.

No surprise Wall Street analysts went to town on the news… “Losing the CFO just before they are to file statements, particularly a CFO that had brought some much-needed credibility to Conseco’s financial reporting, we do view this with considerable concern,” Colin Devine, analyst at Salomon Smith Barney, told The New York Times… Highly unusual for a chief financial officer to leave a company in the midst of its annual audit… Devine added: “The bottom line for investors is this is a bad situation that is getting worse. Our sell rating and $1 price target for the company’s shares say it all.”

A Conseco spokesman told the Times that Chokel left Conseco to pursue other interests, then declined to comment further… Chokel joined Conseco last March, after 23 years at Progressive Corp., the automobile insurance company… Bill Shea, company president and COO, will replace Chokel until a permanent CFO is found… Shea, as you recall, was once vice chairman at accounting firm Coopers & Lybrand.

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>> Managers at government management and consulting company Maximus Inc. hired Richard Montoni to head up the finance department… Montoni replaces Arthur Nerret, who remains with the company as vice president of finance, focusing on financial operations and policy issues… Nerret had served as Maximus’s CFO since 1994… Montoni joins Reston, Va.-based company with more than 26 years of financial and audit experience… Most recently, was CFO at ManagedStorage International, a data storage company… Montoni long-time employee at KPMG, where he was a partner… Maximus had revenues of $487 million in the year ended September 30… Company provides program management, consulting, and information-technology services to governments.

>> Kirk Sobecki signed on as CFO at National Steel, troubled steel maker that filed for Chapter 11 last week… Company’s Chapter 11 filing came just one day after President Bush imposed tariffs and quotas on wide range of steel imports… National Steel likely to get $450 million debtor-in-possession financing with its existing bank group, according to Reuters… Sobecki was formerly vice president and corporate controller at steel maker… Been with company since 1999.