At the end of the week, Ambac (NYSE: ABK) raised $1.5 billion and was able to keep it "Aaa" rating, essential for the company and the bonds it insures.
The capital may have solved some of Ambac’s short term problems, but the number of shares sold to bring in the money caused huge dilution for existing shareholders. According to MarketWatch "The bond insurer had to sell more than 180 million new shares to raise what it needed to satisfy the rating agencies, almost tripling the total outstanding."
Company insiders made relatively large investments on their own, a sign that they believe that. over time, the increase in the share base will not keep the stock price down.
According to Form4Oracle, eight insiders made significant purchases the same day the refinancing closed. The total dollar value of shares purchased by the group was in excess of $600,000. Michael Callen, Ambac’s CEO invested $168,750 at $6,75 a share and one board member put up $135,000.
Hand it to them. All of the insiders did well. Ambac closed at $9.50 on Friday.
Douglas A. McIntyre