MBIA Inc. and CapMAC Holdings Inc. announced the completion of their merger Tuesday evening, with a stock transaction valued at approximately $536 million.
Under the terms of the agreement, CapMAC stockholders will receive 0.46751 of a share of MBIA stock for each share of CapMAC common stock. The exchange ratio was determined by dividing $31 by the average closing price of MBIA stock for a 15-day period prior to completion of the merger.
Under the original terms of the agreement, CapMAC stock holders were expected to receive the equivalent of $35 per share, but that figure was lowered in late January after Standard & Poor's downgraded the claims- paying ability and issuer credit ratings of Asian Securitization and Infrastructure Assurance Ltd. to BB from A. CapMAC owns 11% of ASIA Ltd.
All activities previously carried out by CapMAC will be folded into MBIA's existing finance business under the newly created MBIA Structured Finance Division.
John B. Caouette, chairman and chief executive officer of CapMAC Holdings since its founding in 1987, has been named president of the new division and will be in charge of the company's domestic mortgage and asset-backed activities.
Steven A. Campo, formerly managing director of MBIA's structured finance group, will co-direct the structured finance business with Ram D. Wertheim, formerly CapMAC's general counsel and chief administrative officer. Ruth M. Whaley, chief underwriting officer for CapMAC, will head risk management for the division.
Any outstanding policies issued by CapMAC will remain outstanding and be backed by MBIA Insurance Corp., according to a joint release from the companies.
Moody's Investors Service, Standard & Poor's, and Fitch IBCA have each reaffirmed their triple-A ratings on MBIA's claims-paying abilities.
