Ambac Assurance UK Limited’s Statement Regarding Expiration of Confidentiality Agreements With Certain Holders of Bonds Iss...
08 Décembre 2008 - 5:52PM
Business Wire
Ambac Assurance UK Limited (�AUK�) announced the expiration, as of
today, of confidentiality agreements between certain holders of
bonds (�Participating Bondholders�) issued by Metronet Rail BCV
(�BCV�) and Metronet Rail SSL (�SSL�) and AUK and Financial
Security Assurance (UK) Limited (the �Monolines�). AUK is required
by the terms of these expired confidentiality agreements to issue
this statement. A similar statement was issued by AUK on April 29,
2008. As previously announced on February 13, 2008, funds paid by
London Underground Ltd (�LUL�) in respect of the put option price
on bonds issued by BCV and SSL are being held in escrow and are
available to meet debt service and other amounts due in accordance
with the Bond Trust Deed, escrow agreements and other relevant
documentation. AUK insures �196 million of the SSL indexed-linked
bonds and �350 million of the BCV fixed rate bonds. The SSL bonds
are indexed every six months, which affects the gross and net
amounts. The debt was issued under Public Private Partnership
(�PPP�) contracts to finance the operation, maintenance and the
initial phase of asset upgrades for part of the London Underground.
Under the applicable PPP contracts, insured bondholders and other
senior creditors including commercial banks and the European
Investment Bank benefit from an �Underpinned Amount� providing
credit support from LUL. With respect to the AUK-insured BCV and
SSL bonds, the sum of �617 million has been received from LUL under
this credit support and has been segregated through deposit into
two separate escrow accounts opened in the joint names of AUK and
Deutsche Trustee Company Limited (�Deutsche�) at Citibank, N.A.,
London Branch. Deutsche is the Bond Trustee under the Bond Trust
Deed governing the BCV and SSL bonds. Within the confidentiality
arrangements, the Participating Bondholders and the Monolines
discussed various options relating to the application of funds
currently standing to the credit of the escrow accounts relating to
the bonds (the "Escrow Amounts"). The documentation relating to the
bonds does not clearly set out how the Escrow Amounts should be
applied. Escrow Amounts are currently being used to pay scheduled
interest and principal. The Monolines and the Participating
Bondholders have been involved in discussing other possible
applications of the Escrow Amounts, including: (i) a tender offer;
or (ii) acceleration of the Bonds at par. These discussions have
not yet reached a conclusion. The Monolines will continue to work
towards a decision regarding the application of the Escrow Amounts.
The funds held in escrow are available to meet debt service
guaranteed by AUK and other amounts due in accordance with the Bond
Trust Deed, the escrow agreement and other relevant documentation.
While in escrow, the funds will be invested in UK government
securities, entities which invest solely in UK government
securities, any short term instruments or deposits with a rating of
A-1 or better by S&P and P-1 or better by Moody�s, or other
investments as agreed by AUK and the Bond Trustee. As is typical
for insured transactions that experience an event of default, AUK
has the right to direct that the funds held in escrow be used
either to continue to meet debt service as scheduled or to fund the
acceleration and immediate payment of all principal and interest
due in accordance with the documentation. AUK�s unconditional and
irrevocable guaranty remains in full force and effect.
Forward-Looking Statements This release contains statements about
our future results that may constitute �forward-looking statements�
within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are
based on management�s current expectations and are subject to
uncertainty and changes in circumstances. Actual results may differ
materially from those included in these statements due to a variety
of factors. More information about these factors is contained in
Ambac Financial Group Inc.�s (ultimate parent company to AUK)
(�Ambac�) filings with the Securities and Exchange Commission.
There are a variety of factors, many of which are beyond Ambac�s
control, which affect the operations, performance, business
strategy and results and could cause its actual results to differ
materially from the expectations and objectives expressed in any
forward-looking statements. Readers are cautioned not to place
undue reliance on forward-looking statements which speak only as of
the date they are made. Ambac does not undertake to update
forward-looking statements to reflect the impact of circumstances
or events that arise after the date the forward-looking statements
are made. The reader should, however, consult any further
disclosures Ambac may make in its future filings of its reports on
Form 10-K, Form 10-Q and Form 8-K. 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 a Baa1 rating (developing outlook) from
Moody's Investors Service, Inc. and an A rating (negative outlook)
from Standard & Poor's Ratings Services. Ambac Financial Group,
Inc. common stock is listed on the New York Stock Exchange (ticker
symbol ABK).
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