Bank of America Corporation (the “Offeror”) announced today that it has commenced an offer to purchase for cash (the “Tender Offer”) any and all of the outstanding 5.70% Senior Notes due 2034 (CUSIP No. 55262CAJ9) (the “2004 MBIA Notes”) issued by MBIA Inc., a Connecticut corporation (MBIA), pursuant to a senior indenture dated as of November 24, 2004 (as supplemented, the “2004 Indenture”), between MBIA and The Bank of New York Mellon as trustee.
The purpose of the Tender Offer is to induce holders of record of 2004 MBIA Notes as of 5:00 p.m., New York City time, on November 6, 2012, and who have the right to grant or withhold consent to the 2004 Proposed Amendments (as defined below) (each an “Eligible Holder” and collectively the “Eligible Holders”) to sell their 2004 MBIA Notes to the Offeror rather than consent to certain proposed amendments to the 2004 Indenture (the “2004 Proposed Amendments”) being sought by MBIA in connection with MBIA’s consent solicitation, commenced on November 7, 2012 (the “MBIA Consent Solicitation”).
Affiliates of the Offeror are party to certain credit default swap transactions for which MBIA Insurance Corporation (a subsidiary of MBIA) has provided credit support with a notional value of $6.15 billion (against which we have established credit valuation adjustments for a significant portion). Bank of America believes that if the MBIA Consent Solicitation is successful, the risk of MBIA Insurance Corporation being placed in rehabilitation or liquidation will increase, which would jeopardize all policyholder claims, including Bank of America’s claims under these transactions.
Eligible Holders of 2004 MBIA Notes that are validly tendered and not validly withdrawn prior to 11:59 p.m., New York City time, on November 27, 2012 (the “Early Tender Date”), unless extended by the Offeror, will be eligible to receive the “Total Consideration” of $1,000 in cash per $1,000 principal amount of 2004 MBIA Notes that are accepted for payment, which includes an “Early Tender Premium” of $50 in cash per $1,000 principal amount of 2004 MBIA Notes. Eligible Holders of the 2004 MBIA Notes that are validly tendered after the Early Tender Date but prior to 11:59 p.m., New York City time, on December 11, 2012 (the “Expiration Date”), unless extended by the Offeror, will be eligible to receive only the “Tender Offer Consideration” of $950 in cash per $1,000 principal amount of 2004 MBIA Notes that are accepted for purchase.
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