Ambac aims to raise $1 billion, will lower dividend under capital-enhancement plan

By Lisa Kerner

Charlotte, N.C., Jan. 16 - The board of directors of Ambac Financial Group, Inc. approved a capital-enhancement plan to raise more than $1 billion through the issuance of equity and equity-linked securities.

The plan may also include additional capital from reinsurance or issuance of debt securities, a company news release stated.

As part of the capital initiative, Ambac will reduce the quarterly dividend on its common stock to $0.07 per share from $0.21.

Ambac expects to "meet or exceed" Fitch Ratings' current triple-A capital requirements by raising the capital.

The company's current capital position meets or exceeds the triple-A capital requirements of Standard & Poor's and Moody's Investors Service.

In addition to its plan to raise capital, Ambac announced:

• The naming of presiding director Michael A. Callen as chairman and interim chief executive officer, replacing Robert J. Genader who is retiring effective Wednesday;

• A $5.4 billion pre-tax fair value, or "mark-to-market," loss for the quarter ended Dec. 31;

• An expected net loss per share of up to $32.83 for the fourth quarter ended Dec. 31; and

• An earlier announcement date for fourth-quarter results, which will be reported on Jan. 22 at 6 a.m. ET rather than Jan. 30 as previously expected.

"We are optimistic about the long-term business opportunities ahead for Ambac, even as we respond to the volatility in the present credit market," Callen said in the release.

"We expect that our experienced management team, significant size and scale, and expertise in growing market sectors such as global infrastructure finance will help us tap the potential of the market today and into the future."

Ambac, a New York-based holding company, has subsidiaries that provide financial guarantee products and related services.

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