Thursday, January 31, 2008

Warburg & MBIA

Last month Warburg Pincus agreed to buy 16.1 million shares of MBIA at $31 per share and also received warrants to purchase an additional 8.7 million shares at $40. Today MBIA reported a loss of $18.61/share ($2.3 billion) and the stock is trading at about $12 in pre market. Warburg is known as a savvy shop and they have apparently completed the purchase, but they must really be regretting this. Here's what the CEO of MBIA had to say about the earnings:

``We are disappointed in our operating results,'' Dunton, 52, said in the statement.

That may be the understatement of the decade but I bet he's not as disappointed as Warburg.

The company also said:

``We believe that these steps, along with reduced capital requirements resulting from slower business growth, will result in our capital position surpassing rating agency Triple-A requirements,'' the company said in the statement.

Yeah, lemons and lemonade and all that. Slowing growth means reduced capital requirements; yeah that's good news.

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