Assured Guaranty Files Motion to Lift Stay and Challenge the Commonwealth’s Executive Orders Diverting PRHTA Pledged Toll Revenues Not Subject to Clawback

Thursday, July 21, 2016 8:50 pm EDT

Dateline:

HAMILTON, Bermuda

Public Company Information:

NYSE:
AGO

HAMILTON, Bermuda--(BUSINESS WIRE)--Assured Guaranty Ltd. (NYSE:AGO) released the following statement regarding the motion and form of complaint it filed today challenging the Commonwealth of Puerto Rico’s Executive Orders diverting pledged toll revenue collateral that secures the payment of bonds issued by the Puerto Rico Highways and Transportation Authority (PRHTA). These PRHTA toll revenues are not subject to clawback for payment of the Commonwealth’s general obligation debt under the Puerto Rico Constitution.

Assured Guaranty Municipal Corp. and Assured Guaranty Corp., two bond insurance subsidiaries of Assured Guaranty Ltd. (together with their parent, Assured Guaranty), filed a motion and form of complaint in Federal District Court in Puerto Rico today seeking relief from the stay provided by the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). Upon a grant of relief from the PROMESA stay, the lawsuit further seeks a declaration that the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act (Moratorium Act) is preempted by Federal bankruptcy law and that the Executive Orders diverting the pledged toll revenues are preempted by PROMESA and violate the U.S. Constitution. Additionally, it seeks damages for the value of toll revenues diverted and injunctive relief prohibiting the defendants from taking any further action under the Executive Orders.

With this action, Assured Guaranty is seeking to protect the lien on the pledged toll revenues that secures the payment of PRHTA bonds, which the Commonwealth has already invaded under the purported authority of the Moratorium Act. Even more unjustifiably, through these Executive Orders, the Commonwealth is intent on using pledged toll revenues to fund so-called “essential services” payments to the Government Development Bank for Puerto Rico, which is a deeply subordinated, affiliated, insider creditor of PRHTA, and to other contractually subordinated PRHTA expenses prior to the payment of senior secured PRHTA bonds. In light of the Commonwealth’s irresponsible and unlawful conduct, Assured Guaranty is determined to take reasonable and necessary actions to protect its legal rights as insurer of PRHTA bonds.

Notwithstanding Assured Guaranty’s dispute with the Commonwealth over the unlawful diversion of the pledged toll revenue collateral, Assured Guaranty stands ready to work constructively with its insured Puerto Rico credits and the PROMESA oversight board to address the Commonwealth’s financial and liquidity challenges.

As always, investors owning Puerto Rico-related bonds insured by Assured Guaranty will continue to receive uninterrupted full and timely payment of scheduled debt service in accordance with the terms of Assured Guaranty’s insurance policies.

With $12 billion in claims-paying resources across its group of companies and approximately $400 million generated each year from its $11 billion investment portfolio alone, Assured Guaranty’s liquidity and capital position are very strong.

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 adverse developments in Puerto Rico or at any of its instrumentalities, an inability or failure of creditors and the Commonwealth to implement a consensual restructuring, litigation that has already been initiated or may be initiated in the future, governmental or legislative action or inaction by Puerto Rico or the United States, 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 July 21, 2016. 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:

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