Ambac Announces the Closing of Its Common Stock and Equity Unit Offerings for an Aggregate Capital Raise of $1.5 Billion
12 Mars 2008 - 9:53PM
Business Wire
Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today announced
that it has successfully closed its $1.155 billion public offering
of 171,111,111 shares of common stock, par value $0.01 per share,
at $6.75 per share. Ambac also placed 14,074,074 shares of common
stock in a private placement for $95 million with two financial
institutions. In addition, Ambac announced that it has also
completed its $250 million public offering of 5 million equity
units, with a stated amount of $50 per unit. The equity units carry
a total distribution rate of 9.5%. The threshold appreciation price
of the equity units is $7.97 which represents a premium of
approximately 18% over the concurrent public offering price of
Ambac�s common stock of $6.75 per share. Michael Callen, Chairman
and CEO of Ambac Financial Group, commented that, �We were able to
execute a significant capital raise in a very challenging market.
For this, we are thankful to our investors and other market
participants for their strong support. Throughout this process, we
remained focused on our ultimate goal of safe-guarding and
protecting our triple-A franchise. This is a critical milestone in
our plan to restore market confidence in our financial strength.
The current market environment offers an excellent opportunity for
Ambac to capitalize on its long-standing relationships in many
sectors.� As previously disclosed, Ambac currently intends to
contribute the net proceeds from these offerings to its insurance
company subsidiary Ambac Assurance Corporation in order to increase
its capital position, less approximately $100 million, which it
intends to retain at Ambac to provide incremental holding company
liquidity to pay principal and interest on its indebtedness, to pay
its operating expenses and to pay dividends on its capital stock.
Proceeds from the settlement of the purchase contracts forming a
part of the equity units, in May 2011, will be used to repay $142.5
million of the company's debt maturing August 1, 2011, to the
extent that the cash proceeds of such settlement are sufficient for
such repayment. The remaining proceeds will be retained at Ambac.
Proceeds from the settlement of the purchase contracts will not be
used to repurchase common stock. Credit Suisse Securities (USA)
LLC, Citigroup Global Markets Inc., Banc of America Securities LLC
and UBS Investment Bank were joint book-running managers, and
Keefe, Bruyette & Woods, Inc., Dresdner, Kleinwort Securities
LLC, BNY Capital Markets, Inc. and KeyBanc Capital Markets Inc.
were co-managers, for the common stock offering. Credit Suisse
Securities (USA) LLC, Citigroup Global Markets Inc., Banc of
America Securities LLC and UBS Investment Bank were joint
book-running managers, and Keefe, Bruyette & Woods, Inc. was
also a co-manager, for the equity units offering. Sandler O�Neill +
Partners, L.P. served as independent financial advisor to Ambac
with respect to these offerings. This announcement does not
constitute an offer to sell or a solicitation to buy any of these
securities, nor shall there be any sale of these securities in any
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. Ambac�has filed a
registration statement (including a prospectus and two prospectus
supplements) with the SEC for the offerings to which this
communication relates. These documents are available, at no cost,
by visiting EDGAR on the SEC Web site at www.sec.gov.
Forward-Looking Statements This release contains statements that
may constitute "forward-looking statements" within the meaning of
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Any or all of management�s forward-looking
statements here or in other publications may turn out to be wrong
and are based on Ambac�s management current belief or opinions.
Ambac�s actual results may vary materially, and there are no
guarantees about the performance of Ambac�s securities. Among
events, risks, uncertainties or factors that could cause actual
results to differ materially are: (1)�changes in the economic,
credit, foreign currency or interest rate environment in the United
States and abroad; (2)�the level of activity within the national
and worldwide credit markets; (3)�competitive conditions and
pricing levels; (4)�legislative and regulatory developments;
(5)�changes in tax laws; (6) changes in our business plan,
including changes resulting from our decision to discontinue
writing new business in the financial services area, to
significantly reduce new underwriting of structured finance
business and to discontinue all new underwritings of structured
finance business for six months; (7)�the policies and actions of
the United States and other governments; (8)�changes in capital
requirements whether resulting from downgrades in our insured
portfolio or changes in rating agencies� rating criteria or other
reasons; (9)�changes in Ambac�s and/or Ambac Assurance�s credit or
financial strength ratings; (10)�changes in accounting principles
or practices relating to the financial guarantee industry or that
may impact Ambac�s reported financial results; (11)�inadequacy of
reserves established for losses and loss expenses; (12)�default by
one or more of Ambac Assurance�s�portfolio investments, insured
issuers, counterparties or reinsurers; (13)�credit risk throughout
our business, including large single exposures to reinsurers;
(14)�market spreads and pricing on insured collateralized debt
obligations (�CDOs�) and other derivative products insured or
issued by Ambac; (15)�credit risk related to residential mortgage
securities and CDOs; (16)�the risk that holders of debt securities
or counterparties on credit default swaps or other similar
agreements seek to declare events of default or seek judicial
relief or bring claims alleging violation or breach of covenants by
Ambac or one of its subsidiaries; (17)�the risk that our
underwriting and risk management policies and practices do not
anticipate certain risks and/or the magnitude of potential for loss
as a result of unforeseen risks; (18)�the risk of volatility in
income and earnings, including volatility due to the application of
fair value accounting, or FAS 133, to the portion of our credit
enhancement business which is executed in credit derivative form;
(19)�operational risks, including with respect to internal
processes, risk models, systems and employees; (20)�the risk of
decline in market position; (21)�the risk that market risks impact
assets in our investment portfolio; (22)�the risk of credit and
liquidity risk due to unscheduled and unanticipated withdrawals on
investment agreements; (23)�changes in prepayment speeds on insured
asset-backed securities; (24) factors that may influence the amount
of installment premiums paid to Ambac; (25)�the risk that we may be
required to raise additional capital, which could have a dilutive
effect on our outstanding equity capital and/or future earnings;
(26)�our ability or inability to raise additional capital,
including the risks that regulatory or other approvals for any plan
to raise capital are not obtained, or that various conditions to
such a plan, either imposed by third parties or imposed by Ambac or
its Board of Directors, are not satisfied and thus potentially
necessary capital raising transactions do not occur, or the risk
that for other reasons the Company cannot accomplish any
potentially necessary capital raising transactions, including the
transactions contemplated hereby; (27)�the risk that Ambac�s
holding company structure and certain regulatory and other
constraints, including adverse business performance, affect Ambac�s
ability to pay dividends and make other payments; (28)�the risk of
litigation and regulatory inquiries or investigations, and the risk
of adverse outcomes in connection therewith, which could have a
material adverse effect on our business, operations, financial
position, profitability or cash flows; (29)�other factors discussed
under �Risk Factors� in this prospectus supplement, described in
the Risk Factors section in Part I, 1A of our Annual Report on Form
10-K for the fiscal year ended December 31, 2007 and also disclosed
from time to time by Ambac in its subsequent reports on Form 10-Q
and Form 8-K, which are or will be available on the Ambac website
at www.ambac.com and at the SEC�s website, www.sec.gov; and
(30)�other risks and uncertainties that have not been identified at
this time. Readers are cautioned that forward-looking statements
speak only as of the date they are made and that Ambac does not
undertake to update forward-looking statements to reflect
circumstances or events that arise after the date the statements
are made. You are therefore advised to consult any further
disclosures we make on related subjects in Ambac�s reports to the
SEC. Ambac Financial Group, Inc., headquartered in New York City,
is a holding company whose affiliates provide financial guarantees
and financial services to clients in both the public and private
sectors around the world. Ambac's principal operating subsidiary,
Ambac Assurance Corporation, a guarantor of public finance and
structured finance obligations, has earned triple-A ratings from
Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services; and a double-A rating from Fitch, Inc. Moody's has placed
Ambac's triple-A rating on review for possible downgrade. Standard
& Poor's has placed Ambac's triple-A rating on "credit watch
negative." Fitch has placed Ambac's double-A rating on "rating
watch negative." Ambac Financial Group, Inc. common stock is listed
on the New York Stock Exchange (ticker symbol ABK).
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