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Ambac announces it has commenced a public offering for at least $1 bln worth of shares of its common stock, par value $0.01 per share. Ambac has also granted the underwriters in that public offering a 30-day option to purchase from Ambac additional shares of Common Stock to cover over-allotments, if any. In addition, the co announced that it has concurrently commenced a public offering of Equity Units, with a stated amount of $50 per unit for a total stated amount of $500 mln.
Ambac has also granted the underwriters a 30-day option to purchase additional Equity Units to cover over-allotments, if any. Michael Callen, Chairman and CEO, commented on the offering, saying, "This capital raise, along with our recent strategic actions, our increased emphasis on risk-adjusted returns over the course of an economic cycle and a six-month suspension of the structured finance business, will strengthen our capital base. We expect to be better positioned to take advantage of the current favorable market environment for credit enhancement." He added, "In this offering, we are targeting our core investor base, the long term holders of our stock, who have been loyal to Ambac."
Co also says each Equity Unit will initially consist of a purchase contract and a 1/20 or 5% undivided beneficial ownership interest in a $1,000 principal amount senior note initially due 2021. Co says 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. The remaining proceeds will be used for general corporate purposes including future opportunistic repurchases of outstanding debt. Proceeds from the settlement of the purchase contracts will not be used to repurchase common stock. Also as part of the filing the co disclosed "We also have reduced the quarterly dividend payable on our common shares to $0.01 per share.
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