Exhibit No. 5.1
AMBAC FINANCIAL GROUP, INC.
(a Delaware corporation)
Senior Debt Securities
TERMS AGREEMENT
April 1, 1998
To: Ambac Financial Group, Inc.
One State Street Plaza
New York, New York 10004
Ladies and Gentlemen:
We understand that Ambac Financial Group, Inc., a Delaware
corporation (the "Company"), proposes to issue and sell $200,000,000
aggregate principal amount of its Senior Debt Securities (such securities
being hereinafter referred to as the "Underwritten Securities"). Subject to
the terms and conditions set forth and incorporated by reference herein,
the underwriters named below (the "Underwriters") offer to purchase,
severally and not jointly, the principal amount of Underwritten Securities
set forth opposite their names below at the purchase price set forth below.
Principal Amount of
Underwriter Underwritten Securities
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................. $33,600,000
Goldman, Sachs & Co............................. 33,600,000
PaineWebber Incorporated........................ 33,600,000
Prudential Securities Incorporated.............. 33,600,000
Smith Barney Inc................................ 33,600,000
BT Alex. Brown Incorporated..................... 2,000,000
Robert W. Baird & Co. Incorporated.............. 2,000,000
Bear, Stearns & Co. Inc......................... 2,000,000
CIBC Oppenheimer Corp........................... 2,000,000
Cowen & Company................................. 2,000,000
Dain Rauscher Incorporated...................... 2,000,000
Donaldson, Lufkin & Jenrette
Securities Corporation........................ 2,000,000
A.G. Edwards & Sons, Inc........................ 2,000,000
EVEREN Securities, Inc.......................... 2,000,000
Legg Mason Wood Walker, Incorporated............ 2,000,000
Piper Jaffray Inc............................... 2,000,000
Raymond James & Associates, Inc................. 2,000,000
The Robinson-Humphrey Company, LLC.............. 2,000,000
Tucker Anthony Incorporated..................... 2,000,000
US Clearing Corp................................ 2,000,000
Wheat First Securities, Inc..................... 2,000,000
------------
Total........................................... $200,000,000
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The Underwritten Securities shall have the following terms:
Title: 7.08% Debentures Due March 31, 2098.
Rank: Senior Debt.
Ratings: Moody's Investor's Service, Inc. - Aa2 and
Standard & Poor's Ratings Group - AA.
Aggregate principal amount: $200,000,000.
Denominations: $25.00 and integral multiples thereof.
Currency of payment: United States Dollars.
Interest rate or formula: 7.08% per annum.
Interest payment dates: Each March 31, June 30, September 30 and
December 31.
Regular record dates: Each March 15, June 15,
September 15 and December 15.
Stated maturity date: March 31, 2098.
Redemption provisions: Except as set forth below, the Debentures are
not redeemable prior to March 31, 2003. On or
after March 31, 2003, the Company, at its
option, may redeem the Debentures, in whole
at any time or in part from time to time, on
not less than 30 days but not more than 60
days notice, at a redemption price equal to
100% of the principal amount, plus accrued
interest to the date of redemption. In
addition, under certain circumstances
involving a Tax Event, the Company will have
the right, within 90 days following the
occurrence of such Tax Event, to redeem the
Debentures in whole (but not in part) at 100%
of their principal amount, plus accrued
interest to the date of redemption, as more
fully described in the Prospectus Supplement.
Right to Shorten Maturity: Upon the occurrence of a Tax Event (as
defined in the Prospectus Supplement), the
Company will have the right to shorten the
maturity of the Debentures to the minimum
extent required such that, after shortening
the maturity, the Company will be able to
deduct interest paid on the Debentures for
United States federal income tax purposes, as
more fully described in the Prospectus
Supplement.
Sinking fund requirements: None.
Conversion provisions: None.
Listing requirements: The Company will make application to list the
Debentures for trading on the New York Stock
Exchange.
Black-out provisions: Between the date hereof and April 15, 1998,
the Company will not, without the prior
written consent of the Representatives,
directly or indirectly, issue, sell, offer or
contract to sell, grant any option for the
sale of, or otherwise dispose of, any debt
securities of the Company.
Fixed or Variable Price
Offering: Fixed Price Offering Initial public offering
price: 100% of the principal amount, plus
accrued interest, if any, from April 6, 1998.
Purchase price: 96.85% of the principal amount.
Form: Global certificates representing the
Underwritten Securities registered in the
name of Cede & Co., as nominee for The
Depository Trust Company.
Other terms and conditions: The Underwritten Securities will be issued
under an indenture, dated as of April 1, 1998
between the Company and First Union National
Bank, as Trustee (the "1998 Indenture"). All
references to the "Indenture" in the
Underwriting Agreement shall be deemed to
refer to the 1998 Indenture.
Closing date and location: April 6, 1998; Brown &
Wood LLP, One World Trade Center, New York,
New York 10048.
Co-Managers/Representatives: Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co.,
PaineWebber Incorporated, Prudential
Securities Incorporated and Smith Barney Inc.
Notices: Notices to the Underwriters shall be directed
to the Representatives, c/o Merrill Lynch,
Pierce, Fenner & Smith Incorporated, World
Financial Center, North Tower, New York, New
York 10281-1201, Attention: Tony Ursano.
All of the provisions contained in the Company's Underwriting
Agreement, dated April 1, 1998 (the "Underwriting Agreement"), are hereby
incorporated by reference in their entirety herein and shall be deemed to
be a part of this Terms Agreement to the same extent as if such provisions
had been set forth in full herein. Unless otherwise specified herein, terms
defined in the Underwriting Agreement are used herein as therein defined.
This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed wholly within such State.
If the foregoing is in accordance with your understanding of the
agreement among the Underwriters and the Company, please sign and return to
the undersigned a counterpart hereof, whereupon this instrument, along with
all counterparts and together with the Underwriting Agreement, shall be a
binding agreement among the Underwriters named herein and the Company in
accordance with its terms and the terms of the Underwriting Agreement.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By _______________________________________
Authorized Signatory
Acting on behalf of itself and as
Representative of the other named
Underwriters.
Accepted:
AMBAC FINANCIAL GROUP, INC.
By _________________________________
Name: Richard B. Gross
Title: Senior Vice President,
General Counsel and Secretary