ACA Capital Announces Forbearance Agreement with Counterparties and Comments on Standard & Poor's Ratings Downgrade of ACA Financial Guaranty
Wednesday December 19, 6:54 pm ET
NEW YORK--(BUSINESS WIRE)--ACA Capital Holdings, Inc. (OTC BB: ACAH.PK - News) today announced that it has entered into a forbearance agreement with its Structured Credit and other similarly situated counterparties. Under the agreement, the counterparties have waived all collateral posting requirements and termination rights relating to the rating of ACA Financial Guaranty Corporation (“ACA FG”), ACA Capital’s financial guaranty insurance subsidiary, under their respective transaction documents including any credit support annexes and similar agreements. The forbearance will remain effective until January 18, 2008. During the forbearance period, ACA Capital will continue to work with its counterparties in seeking a more permanent solution to stabilize its liquidity and capital position.
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ACA Capital also responded to the ratings action by Standard & Poor’s (“S&P”) whereby S&P downgraded its financial strength and financial enhancement ratings of ACA FG to ‘CCC’ (Developing Outlook) from ‘A’ (CreditWatch Negative). ACA Capital was surprised by the magnitude of the downgrade given that all of its Structured Credit exposures that were originally rated ‘AAA’ are all still rated ‘AAA’ by S&P, and many of which have been recently affirmed. We believe that the current ‘AAA’ ratings on the individual exposures would not imply the significant level of ultimate loss as suggested by S&P in its ratings analysis of ACA FG. ACA Capital will continue to work with S&P over the next several weeks to better understand its methodology.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains statements that may be considered "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Such statements reflect management's current expectations based on its current views and assumptions regarding future events and economic performance and are subject to risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. For example, the Company's forward looking statements, including its statements regarding certain business strategies and objectives, specifically its comments with regard to events during the forbearance period described above, could be affected by many events. These events include difficulties with the execution of the Company's business strategy or changes in the Company's business strategy, changes in the economic, credit spread or interest rate environment in the United States and overseas, rating actions with respect to the financial strength rating of ACA Financial Guaranty Corporation, prolonged disruptions of the markets in which the Company participates, the failure of the Company to accurately estimate the potential severity of defaults or downgrades in the pool of assets referenced by its insured credit default swaps, decreased demand for the Company's insurance products or asset management services, or increased competition in the Company's markets, loss of key personnel, changes in regulation or tax laws, governmental action, changes in accounting policies or practices, other risks and uncertainties not identified at this time, management's response to these factors, and other risk factors identified in the Company's filings with the Securities and Exchange Commission. The Company cautions that forward-looking statements made by the Company speak only as of the date on which they are made, and, except as required by law, the Company does not undertake any obligation to update or revise such statements if the Company's expectations change or the Company becomes aware that any forward-looking statement is not likely to be achieved.
Contact:
Investor Relations:
ACA Capital
Adam Willkomm, 212-375-2085
Treasurer
awillkomm@aca.com
or
Media:
Hyde Park Financial Communications
Fred Bratman, 212-683-3931 x217
fbratman@hydeparkfin.com
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Source: ACA Capital Holdings, Inc.
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