Ambac Announces Disapproval of Interest Payments on Surplus Notes
Provides Additional Information Related to Proposed Amendments to Plan of
Rehabilitation of Segregated Account
NEW YORK, April 29, 2014 (GLOBE NEWSWIRE) -- Ambac Financial Group, Inc.
(Nasdaq:AMBC) ("Ambac"), a holding company whose subsidiaries provide
financial guarantees and other financial services to clients in both the
public and private sectors globally, announced today that the Wisconsin
Commissioner of Insurance (the "Commissioner") has disapproved the requests of
Ambac Assurance Corporation ("Ambac Assurance") and the Segregated Account of
Ambac Assurance Corporation (the "Segregated Account") to pay accrued interest
on surplus notes ("Surplus Notes") issued by Ambac Assurance and the
Segregated Account, respectively, on their next scheduled interest payment
date of June 7, 2014.
As previously announced, the Commissioner, in his capacity as Court-appointed
rehabilitator of the Segregated Account (the "Rehabilitator"), is seeking
approval from the Rehabilitation Court (Circuit Court of Dane County,
Wisconsin) to amend the Rehabilitation Plan of the Segregated Account (the
"Plan"), with a hearing currently scheduled for June 11, 2014. If the motion
is approved, the Rehabilitator has confirmed that he intends to (i) increase
the percentage of the initial cash payments ("Interim Payments") for permitted
policy claims from 25% to 45% with effect from the later of July 20, 2014,
and, if the amended Plan is not effective as of such date, the first Payment
Date (generally, the 20th of the month) specified by the Rehabilitator
following the amended Plan effective date (the "Reconciliation Date" as
defined in the amended Plan), and (ii) pay to policyholders who received 25%
Interim Payments, catch-up payments equal to 26.67% of the remaining balance
of such claims ("Deferred Amounts") (including interest thereon) outstanding
on the Reconciliation Date.
If the amended Plan is approved, the Rehabilitator expects the catch-up
payments to be made after the first reconciliation of Deferred Amounts with
policyholders under the amended Plan, and in any event, no sooner than
November 20, 2014 (the "Deferred Payment Date").
Although the Commissioner has disapproved the payment of interest on the
Surplus Notes on June 7, 2014, if the amendments to the Plan are approved by
the Rehabilitation Court and the Commissioner approves the payment of a
portion of the Deferred Amounts, a redemption of Surplus Notes (excluding
junior surplus notes) would also be required pursuant to the amended Plan and
the Settlement Agreement entered into by Ambac Assurance and various settling
counterparties on June 7, 2010. The Rehabilitator has indicated that he
anticipates that a portion of the Surplus Notes, together with all accrued and
unpaid interest on such portion, will be redeemed on the Deferred Payment
Date. The aggregate amount to be applied against such redemption will be equal
to 26.67% of the sum of par on all Surplus Notes and accrued and unpaid
interest thereon, in each case, outstanding as of the Reconciliation Date.
As of today's date and pending the hearing on the motion, there can be no
assurances that the motion will be approved by the Rehabilitation Court, nor
that any increase in the Interim Payments or any payment of any Deferred
Amounts or redemption of Surplus Notes will occur.
Copies of the Court filings, including the Plan, as amended, the Payment
Guidelines and other supporting documents, as well as information regarding
the hearing scheduled by the Rehabilitation Court are available at the website
maintained by the Rehabilitator in connection with the Segregated Account
rehabilitation proceedings at www.ambacpolicyholders.com.
Further details relating to the rehabilitation proceedings of the Segregated
Account generally can be found at www.ambac.com in Ambac's Annual Report on
Form 10-K for the year ended December 31, 2013, filed on March 3, 2014.
Ambac Financial Group, Inc., headquartered in New York City, is a holding
company whose subsidiaries, including its principal operating subsidiary,
Ambac Assurance Corporation ("Ambac Assurance"), Everspan Financial Guarantee
Corp., and Ambac Assurance UK Limited, provide financial guarantees and other
financial services to clients in both the public and private sectors globally.
Ambac Assurance, including the Segregated Account of Ambac Assurance (in
rehabilitation), is a guarantor of public finance and structured finance
obligations. Ambac Financial Group, Inc. is also exploring opportunities
involving the acquisition and/or development of new financial services
businesses. Ambac Financial Group Inc.'s common stock trades on the NASDAQ
Global Select Market. For more information, please go to www.ambac.com.
Certain statements in this document are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act. These statements
are based on management's current expectations and are subject to uncertainty
and changes in circumstances. Actual results may differ, possibly materially,
from those included in these statements due to a variety of factors. Important
factors that could cause our results to differ, possibly materially, from
those indicated in the forward-looking statements include, among others, those
discussed under "Risk Factors" in Part I, Item 1A of Ambac Financial Group,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013.
CONTACT: Abbe F. Goldstein, CFA
Investor Relations and Corporate Communications
Ambac Financial Group, Inc.
Ambac Financial Group, Inc.
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