NEW YORK - ACA Capital Holdings, Inc., the parent of troubled bond insurer, ACA Financial Guaranty Corp., this morning said it has entered into a fourth forbearance agreement with its counterparties to extend the forbearance agreement through 11:59 p.m. New York time on May 30, 2008, subject to extension upon certain circumstances.
Under the agreement, the counterparties will continue to waive all collateral posting requirements, termination rights, and policy claims relating to the rating of ACA Financial, under their respective transaction documents including any credit support annexes and similar agreements. The company is pleased to have reached an additional agreement with its counterparties and continues to work closely with them to develop a permanent solution to stabilize its capital position.
It is the fourth forbearance the company has entered into since Standard & Poor's downgraded the financial guarantor to CCC from A on Dec. 19. The credit derivatives sold by ACA require the insurer to post collateral if downgraded to below A-minus. With the drop to CCC, ACA was required to put up about $1.7 billion, an amount the company said it could not produce.
