NEW YORK (TheStreet) -- Ambac Financial Group (ABK) , the bond insurer whose stock rose from a low of 51 cents two weeks ago to $3.39 yesterday, stands a chance of avoiding a delisting from the New York Stock Exchange.
If Ambac can maintain an average closing stock price of $1 for the rest of April, it won't have to entertain a reverse split. Once a stock trades at less than $1 for 30 consecutive trading days, a company is put on notice to increase the share price. That's the first step toward a
Ambac's stock is up about 18% to $1.91 today. Even a close of $1.60 would give the stock room to drop 10 cents a day through April 30 and still hit the target average. Ambac didn't immediately respond to a request for information.
The threat of a delisting is one headache that Ambac doesn't need. Ambac is struggling to remain solvent after it was forced to pay billions of dollars in payouts to companies that bought bond insurance. When the financial crisis struck at the end of 2008, Ambac -- and rival
-- were faced payments that topped premiums.
Ambac, which has a junk rating, three weeks ago filed 2009 financial statements that showed continued operating losses and deteriorating cash flow. Around the same time, Wisconsin's insurance regulator, called the OCI, seized control of a large portion of Ambac Assurance, Ambac Financial's main subsidiary. Given stability by the OCI, Ambac Assurance is completing negotiations to commute billions of dollars of collateralized debt obligations with its counterparties.
-- Reported by Gavin Magor in Jupiter, Fla.
Gavin Magor is the senior analyst responsible for assigning financial-strength ratings to insurance companies. He conducts industry analysis and supports consumer products. Magor has more than 22 years of international experience in operations and credit-risk management, commercial lending and analysis. His experience includes international assignments in Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.