NEW YORK — Ambac Financial Group Inc.’s plan to try to sell $1.5 billion in stock in a bid to safeguard its critical AAA financial-strength rating has also avoided the specter of splitting the company to raise the capital.
Investors, however, sent the company’s shares down nearly 19 percent.
With the New York Insurance Department’s backing, Ambac will offer common stock and equity units to boost its reserves in an effort to maintain its top- notch credit rating, a virtual necessity for it to book new business.
Ambac said its total offering consists of a public stock offering for at least $1 billion and a $500 million offering of equity units that would be exchangeable for common stock in May 2011.
“It is welcomed news that Ambac and the financial institutions that are working with the company are raising the necessary capital to preserve its credit rating for the benefit of all of its policyholders,” New York Gov. Eliot Spitzer said in a prepared statement. “Our goal has been and continues to be bringing stability to the bond insurers to protect the policyholders, including municipal bond issuers, investors and the banks.”
