Ambac Financial has commenced a public offering of $1 billion worth of shares of its common stock at a par value $0.01 per share.
In the proposed public offering, Ambac has also granted the underwriters a 30-day option to purchase from the company additional shares of common stock to cover over-allotments, if any.
In addition, Ambac has concurrently commenced a public offering of equity units, with a stated amount of $50 per unit for a total stated amount of $500 million. It has also granted the underwriters a 30-day option to purchase additional equity units to cover over-allotments, if any.
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. 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.
Credit Suisse Securities USA, Citigroup Global Markets, UBS Securities and Banc of America Securities are acting as joint book-running managers for both the common stock and equity units offering.