Ambac Assurance UK Limited's Statement Regarding Expiration of Confidentiality Agreements With Certain Holders of Bonds Issued b
29 Aprile 2008 - 5:20PM
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�). 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 �193 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 discussing other possible applications of the Escrow Amounts,
including: (i) collateral management (purchase of a suitable
investment portfolio); (ii) a tender offer; or (iii) 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 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, Standard & Poor's and
Fitch all maintain a �negative outlook.� Ambac Financial Group,
Inc. common stock is listed on the New York Stock Exchange (ticker
symbol ABK).
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