http://www.marketwatch.com/story/ambac-w...
FRANCISCO (MarketWatch) -- Ambac Financial Group shares fell 12% Tuesday after the bond insurer said it may file for bankruptcy protection.
Ambac said in a regulatory filing late Monday that it should have enough liquidity to satisfy its needs through the second quarter of 2011.
But Ambac also warned that in the long term its main bond insurance unit, Ambac Assurance, may not be able to pay enough dividends to the holding company. That means the company may not have enough money to pay operating expenses and debt it owes, including a payment that's due in August 2011, the company explained in the filing.
Ambac Assurance isn't allowed to pay dividends in 2009 and will likely be unable to pay dividends next year without special approval from its main regulator, Wisconsin's Office of the Commissioner of Insurance. That will limit Ambac's main source of liquidity.
Ambac also warned that it could run out of liquidity before the second quarter of 2011.
"Ambac is developing strategies to address its liquidity needs; such strategies may include a negotiated restructuring of its debt through a prepackaged bankruptcy proceeding," the insurer said in the filing.
"No assurances can be given that Ambac will be successful in executing any or all of its strategies," it added. "If Ambac is unable to execute these strategies, it will consider seeking bankruptcy protection without agreement concerning a plan of reorganization with major creditor groups."
Ambac shares fell 12% to $1.04 in afternoon trading on Tuesday. The stock has slumped from more than $90 in mid 2007, before the mortgage meltdown triggered a global financial crisis. |
