Ambac Prices Common Stock and Equity Unit Offerings for an Aggregate of $1.5 Billion
07 Marzo 2008 - 9:51AM
Business Wire
Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today announced
that it has priced 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 and has granted the underwriters a 30-day option to
purchase up to an additional 25,666,667 shares of common stock to
cover over-allotments, if any. In addition, Ambac announced that it
has concurrently priced 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. Ambac has granted
the underwriters a 13-day option to purchase up to an additional
750,000 equity units to cover over-allotments, if any. Ambac also
placed 14,074,074 shares of common stock in a private placement for
$95 million with two financial institutions. Michael Callen,
Chairman and CEO of Ambac Financial Group, commented that, �With
this $1.5 billion capital raise and our other capital strengthening
actions and risk management initiatives, we believe that our Ambac
Assurance subsidiary will maintain its triple-A financial strength
ratings with Moody�s and Standard & Poor�s. This is a most
important step in restoring the confidence of our customers in the
stability of our ratings and our inherent financial strength.�
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 are acting
as joint book-running managers, and Keefe, Bruyette & Woods,
Inc., Dresdner, Kleinwort Securities LLC, BNY Capital Markets, Inc.
and KeyBanc Capital Markets Inc. are acting as 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 are acting as joint book-running managers, and
Keefe, Bruyette & Woods, Inc. is also acting as 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. The common stock and equity units will be sold
pursuant to an effective shelf registration statement previously
filed with the Securities and Exchange Commission (the "SEC").
Prospectus supplements relating to the offerings of the common
stock and equity units will be filed with the SEC. Copies of the
prospectus supplements and the accompanying base prospectuses
relating to these offerings may be obtained from Credit Suisse
Securities (USA) LLC, Eleven Madison Avenue, New York, NY 10004,
telephone: (800) 221-1037, facsimile: (212) 325-8057, or Citigroup
Global Markets Inc., Brooklyn Army Terminal, 140 58th Street, 8th
Floor, Brooklyn, NY 11220, telephone: (718) 765-6732, facsimile:
(718) 765-6734, Banc of America Securities LLC, Capital Markets
Operations, 100 West 33rd Street, 3rd Floor, New York, NY 10001,
telephone: (800) 294-1322, email:
dg.prospectus_distribution@bofasecurities.com, or UBS Investment
Bank, Attn: Prospectus Department, 299 Park Avenue, New York, NY
10171, telephone: (888) 827-7275. Ambac�has filed a registration
statement (including a prospectus and two prospectus supplements)
with the SEC for the offerings to which this communication relates.
Before you invest, you should read the prospectus and prospectus
supplement in that registration statement and other documents�Ambac
has filed with the SEC for more complete information about�us and
this offering. You may get these documents for free by visiting
EDGAR on the SEC Web site at www.sec.gov . Alternatively,�Ambac,
any underwriter or any dealer participating in the offering will
arrange to send you the prospectus and the prospectus supplements
if you request them. 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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