Assured Guaranty Files Adversary Complaint Challenging the Commonwealth of Puerto Rico’s Illegal Diversion of Special Revenue Bond Collateral

Category:

Saturday, June 3, 2017 8:30 pm EDT

Dateline:

HAMILTON, Bermuda

Public Company Information:

NYSE:
AGO

HAMILTON, Bermuda--(BUSINESS WIRE)--Assured Guaranty Ltd. (NYSE:AGO) (together with its subsidiaries, Assured Guaranty) released the following comments regarding the adversary complaint filed today challenging the Commonwealth of Puerto Rico’s illegal diversion of special revenue bond collateral that secures the payment of bonds (PRHTA Bonds) issued by the Puerto Rico Highways and Transportation Authority (PRHTA).

Two Assured Guaranty bond insurance subsidiaries, Assured Guaranty Municipal Corp. and Assured Guaranty Corp., filed an adversary complaint in Federal District Court in Puerto Rico today seeking (i) a judgment declaring that the application of pledged special revenues to the payment of the PRHTA Bonds is not subject to the Title III automatic stay and that the Commonwealth has violated the special revenue protections provided to the PRHTA Bonds under the Bankruptcy Code; (ii) an injunction enjoining the Commonwealth from taking or causing to be taken any action that would further violate the special revenue protections provided to the PRHTA Bonds under the Bankruptcy Code; and (iii) an injunction ordering the Commonwealth to remit the pledged special revenues securing the PRHTA Bonds in accordance with the terms of the special revenue provisions set forth in the Bankruptcy Code.

With this action, Assured Guaranty seeks to halt the latest in a series of unconstitutional and unlawful acts undertaken by the Commonwealth (and endorsed by the Financial Oversight and Management Board for Puerto Rico) to manage its financial distress. Since November 2015, the Commonwealth has engaged in an ongoing scheme of constitutional and statutory violations, which repudiate the rule of law by diverting special revenue bond collateral from the payment of PRHTA Bonds to other, unauthorized uses. This illegal diversion of special revenue bond collateral not only impairs Assured Guaranty’s contractual rights and takes its property interests, but also violates the special revenue protections of the Bankruptcy Code, which Congress incorporated into Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). These protections guarantee that holders of special revenue bonds, or their insurers, receive the benefit of their bargain by protecting the lien on post-petition special revenues and exempting the application of such revenues from the automatic stay. Finally, this illegal diversion of special revenue bond collateral should prevent the Commonwealth from accomplishing a primary objective of PROMESA, which is the ability to return to the capital markets.

Irrespective of the Commonwealth’s and Oversight Board’s flagrant repudiation of constitutional and statutory protections provided to the PRHTA Bonds and their unlawful expropriation of special revenue bond collateral, payments to holders of PRHTA Bonds insured by Assured Guaranty will continue to be paid without interruption for the life of the bonds. Assured Guaranty unconditionally and irrevocably guarantees full and timely payment of scheduled debt service, in accordance with the terms of Assured Guaranty’s insurance policies, and upon payment, takes over the rights of the insured bondholders. Assured Guaranty is determined to take reasonable and necessary actions to protect its rights as insurer of PRHTA Bonds.

With $12 billion* in claims-paying resources across its group of companies, which includes an $11 billion investment portfolio that alone generates approximately $400 million of annual investment income each year, Assured Guaranty’s liquidity and capital position are very strong.

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*Aggregate data for operating subsidiaries within the Assured Guaranty Ltd. group. Claims on each subsidiary’s insurance policies/guarantees are paid from that subsidiary’s separate claims-paying resources.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statements made in this press release reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, those resulting from Assured Guaranty's inability to execute its strategies, including its loss mitigation and risk remediation strategies, and negative developments that may impact Assured Guaranty's liquidity and capital, and therefore its ability to make claim payments on time and in full, including less demand for Assured Guaranty's financial guaranty product, or adverse developments with respect to its insured or investment portfolio, and other risks and uncertainties that have not been identified at this time, management's response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of June 3, 2017. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Assured Guaranty Ltd. is a publicly traded Bermuda-based holding company. Its operating subsidiaries provide credit enhancement products to the U.S. and international public finance, infrastructure and structured finance markets. More information on Assured Guaranty Ltd. and its subsidiaries can be found at AssuredGuaranty.com.

Contact:

Robert Tucker, 212-339-0861
Senior Managing Director, Investor Relations and Corporate Communications
rtucker@agltd.com
or
Media:
Ashweeta Durani, 212-408-6042
Vice President, Corporate Communications
adurani@agltd.com