Ambac Sends Letter to Stockholders
SAN JUAN – Ambac Financial Group Inc., a holding company whose subsidiaries, including Ambac Assurance Corp. (AAC), provide financial guarantees and other services, released Monday a letter to stockholders from Ambac’s board, updating them on matters related to the 2016 annual meeting of stockholders.
Below is text pertaining to Puerto Rico in the letter:
- Proactively confronted the situation in Puerto Rico, one of our most distressed legacy exposures and a continued challenge for the Company that has adversely impacted our stock price*. Ambac has been actively involved in negotiations and discussions, educating leaders in Washington and San Juan about the perils of Chapter 9 and has made substantial progress in these efforts and believes that our insistence on establishing an independent control board with meaningful authority will be part of any solution for the Commonwealth, as reflected in recent proposed federal legislation.
- In November 2015, through a Company led initiative and at no cost to Ambac, secured the cancellation of $228.5 million in net par of Puerto Rico Highways and Transportation Authority (“HTA”) bonds, that were pledged as collateral to the GDB [Government Development Bank], equating to approximately $493 million of lifetime principal and interest. This transaction is emblematic of our focused, active, approach to risk and loss mitigation across our portfolio, and with respect to Puerto Rico in particular.
“Also, Mr. [Nader] Tavakoli [Ambac president and CEO] has been diligently participating in the negotiations and deliberations in Washington and San Juan related to determining the appropriate solutions to alleviate the financial difficulties in Puerto Rico, a jurisdiction to which Ambac has substantial legacy economic exposure.”
*During 2015 Ambac’s stock price exhibited a 90.5% correlation with The Puerto Rico General Obligation (“GO”) Bonds 8% of 2035, which are used as a benchmark for Puerto Rican municipal bonds (source:Bloomberg)