Ambac Assurance segregated account’s plan of rehabilitation approved

By Caroline Salls

Pittsburgh, Jan. 23 – Ambac Financial Group, Inc. said the Circuit Court of Dane County, Wis., approved the second amended plan of rehabilitation for the segregated account of subsidiary Ambac Assurance Corp.

According to an Ambac Financial news release, subject to the successful conclusion of an outstanding exchange offer and consent solicitation and satisfaction of other conditions, the approval will facilitate the account’s exit from rehabilitation.

“The rehabilitation court’s issuance of the approval order is a monumental step toward the segregated account’s exit from rehabilitation and further advances one of Ambac’s key strategic priorities,” Ambac president and chief executive officer Claude LeBlanc said in the release.

Ambac said the additional steps necessary for the segregated account to exit rehabilitation include the declaration of a plan amendment effective date by the Commissioner of Insurance for the State of Wisconsin, as rehabilitator of the segregated account, as well as the successful execution of the exchange offer transaction launched on Jan. 11.

In addition, the exit is subject to receipt of consents necessary to amend provisions of a June 10, 2010 settlement agreement between Ambac Financial, Ambac Assurance and other parties, receipt by Ambac Assurance of $240 million in proceeds for tier-two notes expected to be issued under the plan, approval by the Wisconsin Office of the Commissioner of Insurance of a one-time current interest payment of at least $12.5 million on Ambac Assurance’s surplus notes and Ambac Assurance having sufficient capital and claims-paying resources to complete rehabilitation exit transactions.

New York-based Ambac provides financial guarantee insurance for public and structured finance obligations.

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