Financial Security Assurance (FSA) met today with holders of bonds
issued by Metronet Rail BCV (BCV) and Metronet Rail SSL (SSL) to
provide further information on the escrow arrangements for funds
recently received in respect of those bonds and the application of
those funds. As previously announced on February 13, 2008, funds paid
by London Underground Ltd (LUL) in respect of the put option price on
bonds issued by BCV and SSL are being held in escrow and are available
to meet debt service and other amounts due in accordance with the Bond
Trust Deed, escrow agreements and other relevant documentation. The
slide presentation used at today´s presentation will be available on
FSA´s web site at:
http://www.fsa.com/pdfs/20080318metronetpresentation.pdf
Triple-A rated FSA insures GBP 193 million gross (GBP 93 million
net of amounts reinsured) of index-linked bonds issued by BCV and GBP
350 million gross (GBP 170 million net of amounts reinsured) of
fixed-rate bonds issued by SSL. The BCV bonds are indexed every six
months, which affects the gross and net amounts.
The debt was issued under Public Private Partnership (PPP)
contracts to finance the operation, maintenance and the initial phase
of asset upgrades for part of the London Underground.
Under the applicable PPP contracts, insured bondholders and other
senior creditors including commercial banks and the EIB benefit from
an "Underpinned Amount" providing support from LUL. With respect to
the FSA-insured BCV and SSL bonds, the sum of GBP 619 million has been
segregated through deposit into two separate escrow accounts opened in
the joint names of FSA and Deutsche Trustee Company Limited (Deutsche)
at Citibank, N.A., London Branch. Deutsche is the Bond Trustee under
the Bond Trust Deed governing the BCV and SSL bonds.
The funds held in escrow are available to meet debt service
guaranteed by FSA and other amounts due in accordance with the Bond
Trust Deed, the escrow agreement and other relevant documentation.
While in escrow, the funds will be invested in UK government
securities, entities which invest solely in UK government securities,
any short term instruments or deposits with a rating of A-1 or better
by S&P and P-1 or better by Moody´s, or other investments as agreed by
FSA and the Bond Trustee.
As is typical for insured transactions that experience an event of
default, FSA has the right to direct that the funds held in escrow be
used either to continue to meet debt service as scheduled or to fund
the acceleration and immediate payment of all principal and interest
due.
FSA´s unconditional and irrevocable Triple-A guaranty remains in
full force and effect.
THE COMPANY
Financial Security Assurance Holdings Ltd. (the Company),
headquartered in New York City, is a holding company whose affiliates
provide financial guarantees and financial products to clients in both
the public and private sectors around the world. The principal
operating subsidiary, Financial Security Assurance Inc. (FSA), a
leading guarantor of public finance and asset-backed obligations, has
been assigned Triple-A ratings, the highest ratings available, from
Fitch Ratings, Moody´s Investors Service, Inc., Standard & Poor´s
Ratings Services and Rating and Investment Information, Inc. Through
other subsidiaries, the Company provides FSA-insured financial
products, such as guaranteed investment contracts, to obtain funds at
Triple-A cost and then invests those funds in high-quality, liquid
securities. The Company is a member of the Dexia group.
FORWARD-LOOKING STATEMENTS
The Company relies on the safe harbor for forward-looking
statements provided by the Private Securities Litigation Reform Act of
1995. This safe harbor requires that the Company specify important
factors that could cause actual results to differ materially from
those contained in forward-looking statements made by or on behalf of
the Company. Accordingly, forward-looking statements by the Company
and its affiliates are qualified by reference to the following
cautionary statements.
In its filings with the SEC, reports to shareholders, press
releases and other written and oral communications, the Company from
time to time makes forward-looking statements. Such forward-looking
statements include, but are not limited to:
-- projections of revenues, income (or loss), earnings (or loss)
per share, dividends, market share or other financial
forecasts;
-- statements of plans, objectives or goals of the Company or its
management, including those related to growth in adjusted book
value or return on equity; and
-- expected losses on, and adequacy of loss reserves for, insured
transactions.
Words such as "believes," "anticipates," "expects," "intends" and
"plans" and future and conditional verbs such as "will," "should,"
"would," "could" and "may" and similar expressions are intended to
identify forward-looking statements but are not the exclusive means of
identifying such statements.
The Company cautions that a number of important factors could
cause actual results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in forward-looking
statements made by the Company. These factors include:
-- changes in capital requirements or other criteria of
securities rating agencies applicable to FSA;
-- competitive forces, including the conduct of other financial
guaranty insurers;
-- changes in domestic or foreign laws or regulations applicable
to the Company, its competitors or its clients;
-- changes in accounting principles or practices that may result
in a decline in securitization transactions or affect the
Company´s reported financial results;
-- an economic downturn or other economic conditions (such as a
rising interest rate environment) adversely affecting
transactions insured by FSA or its investment portfolio;
-- inadequacy of reserves established by the Company for losses
and loss adjustment expenses;
-- disruptions in cash flow on FSA-insured structured
transactions attributable to legal challenges to such
structures;
-- downgrade or default of one or more of FSA´s reinsurers;
-- market conditions, including the credit quality and market
pricing of securities issued;
-- capacity limitations that may impair investor appetite for
FSA-insured obligations;
-- market spreads and pricing on insured CDS exposures, which may
result in gain or loss due to mark-to-market accounting
requirements;
-- prepayment speeds on FSA-insured asset-backed securities and
other factors that may influence the amount of installment
premiums paid to FSA; and
-- other factors, most of which are beyond the Company´s control.
The Company cautions that the foregoing list of important factors
is not exhaustive. In any event, such forward-looking statements made
by the Company speak only as of the date on which they are made, and
the Company does not undertake any obligation to update or revise such
statements as a result of new information, future events or otherwise.
