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More Bondholders Challenge Proposed Ambac Settlement In Court By Romy Varghese, OF DOW JONES NEWSWIRES The ranks of investors challenging a Wisconsin regulator's plan to rescue the troubled bond insurer Ambac Assurance (ABK) are growing. Eaton Vance, Nuveen Asset Management, Restoration Capital and Stone Lion Capital filed a brief Wednesday in Dane County Circuit Court in Madison, Wis., asserting that the regulator's intention to pay off bank counterparties ahead of policyholders is unfair. The bondholders--who say they hold a majority of Las Vegas Monorail Project Revenue bonds guaranteed by Ambac insurance--are seeking to stop the regulator, the Wisconsin Office of the Insurance Commissioner, from proceeding with a plan that would give unnamed banks $2.6 billion in cash and $2 billion in securities called surplus notes. In exchange, the banks would tear up $17 billion worth of Ambac-insured collateralized debt obligations. These CDOs are not part of the segregated account the regulator created in late March to hold $68 billion worth of contracts on residential mortgage-backed bonds and other kinds of structured securities. Claims made by owners of assets in the segregated account won't be paid until the court approves a rehabilitation plan, which the regulator expects by September. The segregated account is capitalized by a $2 billion secured note due 2050, and remaining claims would largely be satisfied by surplus notes from the general account. In the court papers, the owners of the Las Vegas Monorail bonds--guarantees on which were placed in the segregated account--questioned the proposed deal the regulator struck with the banks. They said the upfront cash payment of $2.6 billion depletes the insurer's assets by almost one-third, considering that Ambac had assets of about $8.5 billion and a $800 million surplus at the end of 2009. It would also severely comprise Ambac's ability to pay the $2 billion secured note to the segregated account policyholders. The brief asserts that the settlement is unfair since it gives preferable treatment to the bank counterparties ahead of Ambac's policyholders. Also, considering Ambac had reserved $3.8 billion for obligations to those banks and others who had similar contracts through credit default swaps, the proposed settlement pays more than the banks' claims are worth "on the face of it," the brief said. "The proposed settlement could have a devastating impact on the rehabilitation of the segregated account of Ambac and cause irreparable harm to the rights of the LVM [Las Vegas Monorail] Bondholders and other policyholders whose policies have been allocated to the segregated account," the brief said. The bondholders not only want the court to block the settlement from happening, which they believe is soon to be finalized, but to have it come under court review and approval. More than $500 million in insured Las Vegas Monorail debt remains outstanding, according to the brief, and Ambac's exposure is around $1.2 billion. Sean Dilweg, the Wisconsin insurance regulator, defended his plan in a written statement. "My intent and my mandate as a regulator are to protect the interests of all policyholders," he wrote. "All of my efforts are geared toward providing a durable solution for policyholders." The motion from the Las Vegas Monorail bondholders comes after another group asked the court late Friday to block the settlement with the banks. The firms-- hedge funds Aurelius Capital Management, Fir Tree Inc., King Street Capital LP, King Street Capital Master Fund, and Monarch Alternative Capital LP and money manager Stonehill Capital Management--also asked to invalidate the segregated account. They own or manage $1 billion of residential mortgage-backed securities backed by Ambac insurance contracts that were placed in the segregated account. In addition, Wells Fargo & Co. (WFC) last month filed a motion objecting to the placement of Las Vegas Monorail insurance in the segregated account, saying in part that those are only municipal guarantees in the account. Ambac, Eaton Vance Management, and Stone Lion Capital Partners LP didn't return requests for comment, and Nuveen Asset Management and Restoration Capital Management declined to comment. Lawyers for the bondholders didn't return calls for comment. Ambac had been losing millions of dollars a month from the toxic structured securities it guaranteed. In the fourth quarter of 2009, it saw a total net loss and loss expenses of $385.4 million. -By Romy Varghese, Dow Jones Newswires; 215-656-8263; romy.varghese@ dowjones.com (END) Dow Jones Newswires 05-06-101418ET Copyright (c) 2010 Dow Jones & Company, Inc. Read more: http://www.nasdaq.com/aspx/stock-market-news-story.aspx?stor… |
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| aus der Diskussion: | AMBAC REBOUND- Ratings, Analysen, Charts, News |
| Autor (Datum des Eintrages): | Balduin1 (06.05.10 20:58:59) |
| Beitrag: | 96 von 133 (ID:39473774) |
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