PURCHASE, N.Y.--(BUSINESS WIRE)--
MBIA Insurance Corporation (MBIA Corp.) today announced that its wholly
owned subsidiary, MBIA UK (Holdings) Limited (MBIA UK Holdings), has
entered into an agreement to sell MBIA UK Insurance Limited (MBIA UK) to
Assured Guaranty Corp. (Assured), a subsidiary of Assured Guaranty Ltd.
(NYSE: AGO). The purchase price consists of the transfer to MBIA UK
Holdings of notes issued by Zohar II 2005-1 CLO (Zohar II Notes) with an
aggregate outstanding principal amount of approximately $347 million
(Assured Zohar II Notes) and a cash payment by MBIA UK Holdings to
Assured of $23 million. The transaction is subject to certain closing
conditions including the receipt of regulatory approvals from the
Prudential Regulation Authority of the United Kingdom, the New York
State Department of Financial Services (NYSDFS) and the Maryland
Insurance Administration. The sale of MBIA UK, effectively in exchange
for the Assured Zohar II Notes, is part of MBIA Corp.’s strategy to
address the maturity of the Zohar II Notes on January 20, 2017, which
had approximately $772 million of gross par outstanding as of June 30,
2016. MBIA Corp. does not currently expect that the Zohar II CLO will
have sufficient cash flow to repay all of the Zohar II Notes at
maturity. There is no assurance that the transaction will be completed
or that MBIA Corp.’s strategies will be successful. The transaction is
scheduled to close in early January of 2017.
Anthony McKiernan, Chief Financial Officer and President of MBIA
Insurance Corp., noted, “As we have previously stated, the sale of MBIA
UK is one of the elements of our plan to enable MBIA Corp. to address
its insurance obligations regarding the Zohar II Notes. The acquisition
of the Assured Zohar II Notes reduces MBIA Corp.’s liability under its
Zohar II policy and may facilitate our ability to address the remaining
Zohar II Notes on or before their maturity.” He added, “While the sale
of MBIA UK, if completed, will be an important and meaningful
accomplishment, MBIA Corp. still has substantially more to do.”
MBIA Corp. is in the process of exploring a variety of additional
strategies to address its obligations with respect to the Zohar II
Notes. These strategies may involve the restructuring or repurchase of
certain Zohar II Notes that may require substantial third party
financing, which MBIA Corp. is seeking to arrange. Its ability to do so,
however, is constrained and there is no assurance that it will be able
to secure a financing on acceptable terms. If, notwithstanding the
transaction announced today, MBIA Corp. is unable to successfully
implement its strategies for restructuring or otherwise satisfying its
obligations under the Zohar II Notes, it does not expect to have a
sufficient amount of liquid assets to pay all claims in respect to the
Zohar II Notes at maturity (irrespective of whether the sale of MBIA UK
is completed). MBIA Corp. anticipates that the approval by the NYSDFS of
the sale of MBIA UK, if granted, would be based on (among other things)
the NYSDFS concluding that MBIA Corp. will successfully execute its
strategies to meet and/or restructure its obligations on the Zohar II
Notes in a manner acceptable to the NYSDFS.
MBIA Corp. believes that if the NYSDFS concludes at any time that MBIA
Corp. will not be able to restructure or otherwise satisfy its
obligations under the Zohar II Notes on terms satisfactory to the
NYSDFS, while maintaining sufficient assets to readily pay other
policyholder claims, the NYSDFS would likely put MBIA Corp. into a
rehabilitation or liquidation proceeding under Article 74 of the New
York Insurance Law and/or take such other actions as the NYSDFS may deem
necessary to protect the interests of MBIA Corp.’s policyholders. The
determination to commence such a proceeding or take other such actions
is within the exclusive control of the NYSDFS. The NYSDFS enjoys broad
discretion in this regard, and any determination they may make would not
be limited to consideration of the matters described above. No assurance
is given as to what action, if any, the NYSDFS may take.
Barclays Capital is acting as financial advisor, and Debevoise &
Plimpton LLP is acting as legal advisor, on the sale of MBIA UK.
Forward-Looking Statements
The information contained in this press release should be read in
conjunction with our filings made with the Securities and Exchange
Commission. This release includes statements that are not historical or
current facts and are “forward-looking statements” made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. The words “believe,” “anticipate,” “project,” “plan,” “expect,”
“estimate,” “intend,” “will likely result,” “looking forward” or “will
continue,” and similar expressions identify forward-looking statements.
These statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical earnings
and those presently anticipated or projected, including, among other
risks and uncertainties, the possibility that the Company will
experience increased credit losses or impairments on public finance
obligations we insure issued by state, local and territorial governments
and finance authorities that are experiencing fiscal stress, the
possibility that MBIA Corp. will have inadequate liquidity to pay claims
as a result of increased losses on certain structured finance
transactions, in particular residential mortgage-backed securities
transactions that include a substantial number of ineligible mortgage
loans, or a delay or failure in collecting expected recoveries, the
possibility that loss reserve estimates are not adequate to cover
potential claims, a disruption in the cash flow from our subsidiaries or
an inability to access capital and our exposure to significant
fluctuations in liquidity and asset values within the global credit
markets as a result of collateral posting requirements, our ability to
fully implement our strategic plan, including our ability to maintain
high stable ratings for National and generate investor demand for our
financial guarantees, deterioration in the economic environment and
financial markets in the United States or abroad, and adverse
developments in European sovereign credit performance, real estate
market performance, credit spreads, interest rates and foreign currency
levels, the effects of governmental regulation, including insurance
laws, securities laws, tax laws, legal precedents and accounting rules;
and uncertainties that have not been identified at this time. These and
other factors that could affect financial performance or could cause
actual results to differ materially from estimates contained in or
underlying the Company’s forward-looking statements are discussed under
the “Risk Factors” section in MBIA Inc.’s most recent Annual Report on
Form 10-K and Quarterly Report on Form 10-Q, which may be updated or
amended in the Company’s subsequent filings with the Securities and
Exchange Commission. The Company cautions readers not to place undue
reliance on any such forward-looking statements, which speak only to
their respective dates. The Company undertakes no obligation to publicly
correct or update any forward-looking statement if it later becomes
aware that such result is not likely to be achieved.
MBIA Insurance Corporation is a wholly owned subsidiary of MBIA Inc.,
which is headquartered in Purchase, New York. MBIA Inc. is a holding
company whose subsidiaries provide financial guarantee insurance for the
public and structured finance markets. Please visit MBIA's website at www.mbia.com.
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For MBIA Insurance Corporation
Greg Diamond, 914-765-3190
Investor
and Media Relations
greg.diamond@mbia.com
Source: MBIA Insurance Corporation