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Ambac Prices Common Stock and Equity Unit Offerings for an Aggregate of $1.5 Billion


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NEW YORK.- 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.



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