MBIA (MBI) Recommends Note Holders Reject BofA (BAC) Offer

November 20, 2012 11:22 AM EST
MBIA Inc. (NYSE: MBI) recommends rejection of the unsolicited tender offer by Bank of America Corporation (NYSE: BAC) on November 13, 2012 to purchase all of MBIA’s outstanding 5.70% Senior Notes due 2034. MBIA Inc. is the parent of MBIA Insurance Corporation.

MBIA arrived at this position after considering all of the facts and circumstances surrounding BOA’s unsolicited note tender offer. In particular, MBIA believes that BOA’s tender offer is not in the best interest of the holders of our Notes because:

* As reflected in BOA’s own public statements, we believe the purpose of BOA’s tender offer is not to make an economic investment in MBIA Inc.'s debt securities, but rather to affect the outcome of MBIA Corp.'s RMBS-related put-back claims against BOA and obtain a preferential settlement of those claims and its other MBIA Corp. exposure. Such an outcome would be detrimental to all policyholders other than BOA; and, in combination with BOA’s stated intention that the consent solicitation amending the bond indentures fail, detrimental to all MBIA Inc. bondholders. MBIA is evaluating its legal options with respect to BOA’s tender offer, including whether it violates any applicable laws, and may take such actions as it believes are available to it and necessary to protect the interests of its insurance subsidiaries' policyholders and its security holders. There can be no assurance that MBIA will prevail in any such action if it commences an action or that MBIA will successfully contest BOA’s tender offer on these or other grounds.
* BOA has retained a right to terminate the tender offer under a number of specified circumstances, significantly reducing the likelihood that the transaction will be completed.

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