Ambac Financial Group, Inc., an insurance holding company, has announced it is to sell its legacy financial guarantee businesses, Ambac Assurance Corporation (AAC) and Ambac UK (AUK), to funds managed by Oaktree Capital Management, L.P..
The company has signed a definitive agreement to sell these businesses to Oaktree for $420 million in cash.
Additionally, Oaktree will receive warrants to acquire up to 9.9% of Ambac common stock at a strike price of $18.50, according to the announcement.
Ambac President and Chief Executive Officer Claude LeBlanc said: “Three years ago, we announced our vision and strategy to transform Ambac into a specialty property and casualty insurance platform.
“The sale of our legacy financial guarantee business is the final step in that transition, and it enables us to focus solely on building a profitable P&C platform that will continue to deliver long-term value for our shareholders.”
“Oaktree is proud to partner with and support Ambac in its successful transformation,” said Oaktree Managing Director Greg Share. “We recognize the progress AAC and AUK have made to de-risk their insurance liabilities, which will continue post-closing in partnership with the existing team.”
Expected to take place in the fourth quarter of 2024 or first quarter of 2025, the closing of the transaction remains subject to customary conditions, including regulatory approvals in the US and UK and approval by Ambac’s shareholders.
Moelis & Company LLC served as exclusive financial advisor and Debevoise & Plimpton LLP provided legal counsel to Ambac.
BlackRock’s Financial Markets Advisory team served as valuation advisor and Kirkland & Ellis LLP served as legal counsel to Oaktree.
