Ambac Remains in Compliance with Covenants under $400 million Credit Facility
02 Maggio 2008 - 10:40PM
Business Wire
Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today announced
that Ambac and Ambac Assurance remain in full compliance with the
terms and conditions of their $400 million credit facility which
remains undrawn. The credit facility contains two financial
covenants requiring Ambac to: (i)�maintain a debt-to-total capital
ratio as defined in the credit facility, of not more than 30%, and
(ii)�maintain at all times net assets equal to or greater than
$4.375 billion. The net assets financial covenant increases, in an
amount equal to 25% of the prior fiscal year�s net income
commencing with fiscal year 2008, 50% of the net proceeds of any
2008 equity issuances, and 25% of the net proceeds of any equity
issuances thereafter. The minimum net assets requirement increased
to $4.956 billion after applying the net proceeds from the equity
capital raised in March, 2008. Ambac will continue its discussions
with the lender banks to provide additional flexibility relating to
the credit facility. Sean Leonard, Chief Financial Officer of
Ambac, commented that, �We have been carefully evaluating our
compliance with the terms of the credit facility. While our
preliminary calculations suggested that there may be a modest
non-compliance to the minimum net assets requirement, we can now
confirm that we are in compliance by approximately $65 million. The
difference relates to an adjustment that properly reflects the full
tax benefit associated with our first quarter results.�
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 from March 6th, 2008; (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; (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 additional factors described in the Risk Factors
section of Ambac�s Current Report on Form 8-K dated March 12, 2008
and in its Annual Report on Form 10-K for the fiscal year 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 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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