Mission Plans to Restructure Its Public Debt : Insurance Firm Also Will Delay Interest Payment

Mission Insurance Group, parent of troubled Mission Insurance, said Wednesday that it intends to restructure its public debt, with noteholders being asked to accept new notes having a lower face value.

The company also said it’s postponing a semiannual interest payment of $950,000 due Sunday on $50 million in notes. The company said it will pay that interest later to those choosing not to participate in the debt restructuring.

The firm didn’t give specifics of the restructuring except to say that it would call for the company to issue new notes with lower face value and that holders would be asked to modify or waive certain unspecified conditions in the existing notes.

The announcement comes just a day after the firm said regulators in California and Texas had placed in receivership five subsidiaries of Mission Insurance, which itself was put under California conservatorship earlier this month on grounds that it was insolvent.

More-Than-Expected Claims

Mission Insurance and its subsidiaries are primarily involved in workers’ compensation insurance and have suffered larger-than-expected claims.

Also Tuesday, California regulators approved a bail-out plan for Mission Insurance under which some of its liabilities would be shifted to Mission American Insurance, another unit of Mission Insurance Group.

The bail-out was contingent upon Mission American getting a $125-million infusion of new capital from American Financial Corp. of Cincinnati.

Earlier this year, financier Carl Lindner’s American Financial, which owns 49.9% of Mission Insurance Group, had pumped $115 million into the troubled company.

During the first nine months of this year, Mission Insurance Group reported a $65-million loss, a decline of nearly 35% from its year-earlier deficit.