Armonk, N.Y.-based MBIA Inc. said today it will attempt to raise $750 million by selling 50.3 million shares of its common stock. The move came a day after Fitch ratings placed the bond insurer's “triple-A” ratings on Rating Watch Negative.
Fitch said this would not change its stance.
MBIA said that private equity firm Warburg Pincus has agreed to backstop the offering by purchasing up to $750 million in convertible participating preferred stock, if necessary.
Warburg had already purchased 16.1 million shares of MBIA Common Stock worth $500 million on Jan. 30 as part of a previous agreement whereby Warburg has committed to investing up to $1 billion in MBIA.
MBIA said it will contribute net proceeds from the offering to MBIA Insurance Corporation, “to support its business plan.”
The company also announced that it has decreased by $6.5 million its previously reported net loss of $2.3 billion for the fourth quarter of 2007. This adjustment is due to a $110 million decrease in a previously announced fourth-quarter write-down and a doubling of loss reserves, from $100 million to $200 million, for prime, second-lien mortgage exposure.
Thomas Abruzzo, managing director at Fitch, said these announcements by MBIA will not have an affect on the rating agency's outlook on the company.
“I think our bigger concern is really what's going to happen in the future, particularly with respect to the CDO (collateralized debt obligations) book, and that continues to be our main focus. That's where the uncertainty lies,” Mr. Abruzzo said
He added that announcements similar to the recent ones made by MBIA are “probably not the main focus of where we're spending our time.”
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