Syncora Guarantee Inc. has signed a nonbinding letter of intent with most of its financial counterparties to "negotiate in good faith" on finalizing a deal that would commute certain exposures and lead to the creation of a new insurance subsidiary that would take on parts of its existing public finance and global infrastructure books of business, parent Syncora Holdings Ltd. said Friday in a filing with the Securities and Exchange Commission.

To commute or transfer certain exposures, Syncora would give counterparties approximately $1.2 billion in cash, about 40% of the outstanding common stock of the company, a $150 million short-term and a $475 million long-term surplus note from Syncora Guarantee, along with other potential payments.

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