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MBIA Insurance to sell European operating unit to Assured Guaranty

AssuredGuaranty Ltd. unit Assured Guaranty Corp. agreed to acquire operatingsubsidiary MBIA UK Insurance Ltd.

The purchase price consists of the transfer to MBIA UKHoldings of notes issued by Zohar II 2005-1 CLO with an aggregate outstandingprincipal amount of approximately $347 million and a cash payment by MBIA UKHoldings to Assured of $23 million.

The sale of MBIA UK is part of MBIA Insurance's to address the maturityof the Zohar II notes on Jan. 20, 2017, which had approximately $772 million ofgross par outstanding as of June 30. MBIA Insurance does not expect Zohar IICLO will have sufficient cash flow to repay all of the Zohar II notes atmaturity.

MBIA Insurance reiterated that the New York State Departmentof Financial Services could place it into rehabilitation or liquidation if theregulator determined that it does not have enough assets to address its obligationswith respect to the Zohar II notes.

The transaction is expected to close in early January 2017,subject to receipt of regulatory approvals from the U.K. Prudential RegulationAuthority, the New York State Department of Financial Services and the MarylandInsurance Administration.

Barclays Capital serves as financial adviser, and Debevoise& Plimpton LLP is acting as legal adviser, on the sale of MBIA UK. Bank ofAmerica Merrill Lynch is acting as financial adviser to Assured Guaranty, andMayer Brown LLP is acting as its legal adviser.