Ambac Announces the Closing of its Common Stock and Equity Unit Offerings for an Aggregate Capital Raise of $1.5 Billion

NEW YORK.- Ambac Financial Group, Inc. (NYSE:ABK) (Ambac) today announced that it has successfully closed 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. Ambac also placed 14,074,074 shares of common stock in a private placement for $95 million with two financial institutions.

In addition, Ambac announced that it has also completed 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.

Michael Callen, Chairman and CEO of Ambac Financial Group, commented that, “We were able to execute a significant capital raise in a very challenging market. For this, we are thankful to our investors and other market participants for their strong support. Throughout this process, we remained focused on our ultimate goal of safe-guarding and protecting our triple-A franchise. This is a critical milestone in our plan to restore market confidence in our financial strength. The current market environment offers an excellent opportunity for Ambac to capitalize on its long-standing relationships in many sectors.”

As previously disclosed, 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 were joint book-running managers, and Keefe, Bruyette & Woods, Inc., Dresdner, Kleinwort Securities LLC, BNY Capital Markets, Inc. and KeyBanc Capital Markets Inc. were 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 were joint book-running managers, and Keefe, Bruyette & Woods, Inc. was also 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.

This announcement does not constitute an offer to sell or a solicitation to buy any of these securities, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Ambac has filed a registration statement (including a prospectus and two prospectus supplements) with the SEC for the offerings to which this communication relates. These documents are available, at no cost, by visiting EDGAR on the SEC Web site at www.sec.gov.