Assured Guaranty Announces Certain Determinations for Assured Insured Puerto Rico Highways and Transportation Authority Bonds Under Title III Plan of Adjustment

July 7, 2022

The Third Amended Title III Plan of Adjustment of the Puerto Rico Highways and Transportation Authority, as amended (the Plan), provides that all Assured Guaranty Corp. (AGC) and Assured Guaranty Municipal Corp. (AGM and, together with AGC, Assured Guaranty) insured Puerto Rico Highways and Transportation Authority Bonds (Assured Insured HTA Bonds) will be accelerated and immediately due and payable as of the date the Plan becomes effective (the HTA Effective Date). In accordance with the Plan, Assured Guaranty has made certain determinations as described below. Capitalized terms used without definition in this statement have the meanings assigned to such terms in the Plan.

Pursuant to the Plan, and consistent with Assured Guaranty’s rights under the applicable insurance policies, Assured Guaranty may elect, in its sole discretion, to make payment on any date when such payment is due by reason of acceleration or other advancement of maturity (the Assured Election).

Assured Guaranty has exercised the Assured Election for those Assured Insured HTA Bonds identified on schedule A (Schedule A Bonds). If the Plan is confirmed by the Title III Court, holders of Schedule A Bonds (Schedule A Bondholders) will receive, on the HTA Effective Date, an acceleration price of one hundred percent (100%) of the principal amount outstanding at that time plus accrued interest thereon to the date of payment (the Acceleration Price).

Assured Guaranty did not exercise the Assured Election for those Assured Insured HTA Bonds identified on schedule B (Schedule B Bonds). Instead, consistent with the Plan, Assured Guaranty has offered the holders of the Schedule B Bonds (Schedule B Bondholders) a choice of two Assured Bondholder Elections:

1. Assured Bondholder Election 1. If the Plan is confirmed by the Title III Court, then on the HTA Effective Date, Schedule B Bondholders who elected Assured Bondholder Election 1 will be paid the applicable Acceleration Price.
2. Assured Bondholder Election 2. If the Plan is confirmed by the Title III Court, then on the HTA Effective Date, the Schedule B Bonds whose holders elected, or were deemed to have elected, Assured Bondholder Election 2 (the Election 2 Bonds) will be exchanged for certain Trust Units (described in greater detail immediately below).

The Trust Units represent an interest in a custodial trust or similar structure established for the related Election 2 Bonds that holds: (a) certain New HTA Bonds, and/or cash¹, delivered by HTA or the Commonwealth on the HTA Effective Date; and (b) the AGM or AGC insurance policy related to the Election 2 Bonds (the Legacy Insurance Policy). As of the HTA Effective Date, the Legacy Insurance Policy continues to insure, in accordance with its terms, payment of principal (the Legacy Insured Principal) and interest (the Legacy Insured Interest) in the original amounts, and on the original payment dates, as the Legacy Insurance Policy insured for the Election 2 Bonds immediately prior to the exchange, subject to the below.

The Trust Units have a Notional Amount equal to the Legacy Insured Principal amount. Therefore, at the HTA Effective Date, the Notional Amount of the Trust Units will equal the outstanding principal amount of the Election 2 Bonds immediately prior to the exchange.

As the trust receives (i) cash delivered on the HTA Effective Date by HTA or the Commonwealth, if any, (ii) payments on the New HTA Bonds, and (iii) proceeds from the sale of any New HTA Bonds, it will promptly distribute this to the Trust Unit holders. Such cash distributions, as of the date they are made, will first pay accrued Legacy Insured Interest and then Legacy Insured Principal and, as a result, reduce the Notional Amount of the Trust Units. To the extent the distributions described in the immediately preceding sentence are insufficient to pay or prepay Legacy Insured Interest and/or Legacy Insured Principal on or before an originally scheduled payment date, AGM or AGC will make such payment in accordance with the Legacy Insurance Policy.

Consistent with the terms of the Plan and Assured Guaranty’s rights under the applicable insurance policies, Assured Guaranty will retain the right to satisfy its obligations under its Legacy Insurance Policies at any time thereafter, with 30 days’ notice to the relevant Trust Unit holders, by paying the Acceleration Price.

Assured Guaranty makes no representations, warranties, or guarantees, and disclaims any liability, with respect to the tax treatment of any custodial trust established in connection with Election 2 Bonds, any payments made in connection with such a custodial trust, or any securities or other property held in such a trust or similar structure, or issued in connection therewith.

From and after payment of the Acceleration Price, interest on such Assured Insured HTA bonds shall cease to accrue and be payable. Payment of the applicable Acceleration Price with respect to any Assured Insured HTA Bonds shall satisfy and discharge all of Assured Guaranty’s obligations under the Assured Guaranty insurance policies with respect to such Assured Insured HTA Bonds.

Concurrent with the distribution of the Disclosure Statement relating to the Plan and solicitation of votes on the Plan, holders of Assured Insured HTA Bonds will receive a notice informing them of the treatment of their bonds under the Plan, as outlined in this statement. For Schedule A Bondholders, no further action is required. Schedule B Bondholders should follow the instructions contained in the notice to make their Assured Bondholder Election. Schedule B Bondholders who fail to make an election will be deemed to have elected Assured Bondholder Election 2.

¹ Pursuant to the Plan, HTA and the Commonwealth have the right to elect to substitute Cash, on a dollar-for-dollar basis, for New HTA Bonds that would otherwise be issued and delivered on the HTA Effective Date. Such election, if made, will be disclosed by HTA or the Commonwealth no later than seven (7) days prior to the HTA Effective Date.

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The information set out above contains forward-looking statements that reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, those resulting from the failure of the Plan to be confirmed by the Title III Court as anticipated by Assured Guaranty or a successful legal challenge to relevant portions of the Plan, Assured Guaranty's inability to execute its strategies, including its loss mitigation and risk remediation strategies, and negative developments that may impact Assured Guaranty's liquidity and capital, and therefore its ability to make claim payments on time and in full, including less demand for Assured Guaranty's financial guaranty product, or adverse developments with respect to its insured or investment portfolio, and other risks and uncertainties that have not been identified at this time, management's response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of July 7, 2022. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.