UPDATE: Ambac Execs Buy Shares In Latest Offering

By Daniel | March 7, 2008

UPDATE: Ambac Execs Buy Shares In Latest Offering

Last Update: 3/7/2008 4:00:14 PM

DOW JONES NEWSWIRES

Ambac Financial Group Inc. (ABK) insiders bought nearly 100,000 shares after the
second-largest bond insurer sold $1.5 billion in stock, tripling its shares
outstanding.

According to regulatory filings, nine executives or directors bought 93,250
shares for $6.75 each, or about $630,000.

Chairman and Chief Executive Michael A. Callen bought 25,000 shares, bringing his
total to 49,060. Chief Financial Officer Sean T. Leonard bought 1,000 shares.

Thomas C. Theobald, a director, purchased 20,000 shares while directors Henry
D.G. Wallace and Jill M. Considine each purchased 10,000 shares.

Ambac said Friday that it raised about $1.5 billion in capital through the
offering of common stock and equity units in a move aimed at preserving the
triple-A ratings of its Ambac Assurance subsidiary.

The offering, which priced 185.2 million common shares at $6.75 each and five
million equity units at $50 each, was completed in an attempt to fend off
downgrades from rating firms Moody’s Investors Service and Standard & Poor’s,
which have kept Ambac AAA rating on review for downgrade.

Fitch Ratings cut Ambac’s rating to AA and kept it on watch for possible
downgrade.

Ambac, the largest bond insurer after MBIA Inc. (MBI), admitted in its
capital-raising prospectus Wednesday that it has written virtually no new
business in 2008, while its credit rating has been under threat.

In an interview Friday on CNBC, CEO Callen stressed that the company had cash on
hand to pay claims far above current worst-case scenarios and said earnings are
“assured for the next two years.”

There hasn’t been a stock offering as big that increased shares outstanding as
much as Ambac’s did in at least 13 years, according to Dealogic.

There have been just 10 deals since 1997 where a company raised 50% or more of
stock, and the nearest in size was a 2006 offering from Alesco Financial Inc.
(AFN) that raised $273.2 million, Dealogic reported.

Did you like this? If so, please bookmark it,

$\\$