Business Context and Reporting Period
Company: Assured Guaranty Ltd.
Filing Type: Form 8-K (Current Report)
Date of Report: September 16, 2008
Context: The filing reports the entry into a material definitive agreement regarding the modification of an existing investment agreement with WLR Recovery Fund IV, L.P. and affiliated funds (the "WLR Funds").
Key Financial Metrics
This filing does not contain financial statements, revenue, profit, cash flow, margin, debt, or liquidity data. The document focuses exclusively on corporate governance and shareholder agreement modifications.
Material Changes and Agreements
- Waiver of Standstill Provisions: On September 16, 2008, Assured Guaranty agreed to waive standstill provisions in its February 28, 2008 Investment Agreement with the WLR Funds.
- Additional Share Purchase: The waiver permits the WLR Funds to purchase up to 5,000,000 additional common shares in open market transactions.
- Ownership Impact:
- Current WLR Funds ownership: Approximately 13.4% (based on 10,651,896 shares).
- Potential ownership if all additional shares are purchased: Approximately 18.9% (based on shares outstanding as of June 30, 2008).
- Voting Restrictions: All additional shares are classified as "Controlled Shares." Voting rights for these shares will be reduced to ensure the WLR Funds' total voting power remains below 9.5% of the Company's total voting power. Shares must be voted in proportion to the votes cast by all other holders.
- Transfer Restrictions: The WLR Funds may not transfer shares except in registered transactions, open market transactions, or to transferees who would not own more than 4.9% of the Company's common shares.
Outlook, Risks, and Other Events
- Potential Credit Default Swaps (CDS): The WLR Funds advised the Company they may propose entering into CDS transactions during 2008 and 2009 to provide risk protection for bonds insured by an Assured Guaranty subsidiary.
- Uncertainty: There is no assurance that any additional share purchases or CDS transactions will occur.
- Compliance: The WLR Funds have adopted procedures to ensure CDS transactions comply with securities laws and avoid the use of material non-public information.
Investor Verification Checklist
- Verify the exact number of shares outstanding as of the most recent date to calculate the precise percentage ownership if the WLR Funds exercise their option to buy 5,000,000 shares.
- Confirm the specific terms of the voting reduction mechanism to understand how the 9.5% voting cap is mathematically applied.
- Monitor future filings for any actual execution of the proposed Credit Default Swap (CDS) transactions.
- Review the attached Exhibit 10.1 for the full legal text of the approval and waiver.