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At Cadwalader, we believe that the truest measure of our success is the success of our clients. Our case studies provide insight into how we help our clients deal with challenges and seize opportunities in the area of distressed M&A: CIFG
CIFG, a family of financial guaranty companies, provides insurance for investment grade transactions in the public finance, project finance and structured finance markets. Faced with problematic credits, CIFG turned to Cadwalader for assistance in developing strategic alternatives to help improve its capital position. Cadwalader represented CIFG Holding, Ltd., the holding company for CIFG’s financial guaranty subsidiaries and its principal shareholders, Banque Populaire Group and Caisse d’Epargne Group, in its negotiations with counterparties, resulting in a September 2 Memorandum of Understanding with more than 75% (based on par outstanding) of credit default swap counterparties and insured bondholders on CIFG’s insured ABS CDO exposures and certain CRE CDO exposures. Upon the closing of the transactions contemplated under the Memorandum, which is non-binding, CIFG will successfully commute approximately $12 billion in notional ABS CDO and CRE CDO exposures in exchange for cash and equity. The contemplated transactions are expected to substantially reduce CIFG’s exposure to problematic derivatives, resulting in a significantly improved capital position and claims paying resources sufficient to satisfy rating agency investment grade capital requirements. As part of the Memorandum, CIFG will seek to reinsure its public finance portfolio with a Double-A rated insurer, providing municipal investors with important new enhanced protection. The final agreement is subject to the execution of definitive documentation by 100% of the credit default swap counterparties to the ABS CDO transactions and the designated CRE CDO transactions. The closing is also subject to a number of other conditions, including obtaining any required approvals from Bermuda, New York and French regulators. XL Capital, Ltd.
Cadwalader represented XL Capital, Ltd. (“XL”), a Bermuda-based insurance company, in connection with the restructuring of monoline insurance company Security Capital Assurance Ltd ("SCA") (now known as Syncora). XL, through its operating subsidiaries, is a leading worldwide provider of global insurance and reinsurance coverage to industrial, commercial, and professional service firms; insurance companies; and other enterprises. As of June 30, 2008, XL had consolidated assets of approximately $52.1 billion and consolidated shareholders' equity of $8.8 billion. SCA was created when XL spun off its monoline insurance business in 2006. XL remained a 46 percent shareholder and issued a guarantee of certain reinsurance obligations outstanding at the time of the spin-off. The at-the-time face value of obligations covered by the guarantee was approximately $80 billion. In the context of a global restructuring of SCA, XL negotiated to be released from its guarantee in exchange for a payment of $1.78 billion, plus 8 million shares of XL common stock. The release from the guarantee permitted XL to complete a $2.9 billion equity raise, which closed on August 6, 2008, and funded the payment to SCA. In order to execute the agreement with SCA, XL also obtained the consent of the New York Insurance Department (“NYID”) and a group of credit default swap (“CDS”) counterparties who had claims against SCA and, accordingly, had an interest in the disposition of the guarantee. Cadwalader spearheaded the negotiations with SCA, the NYID, and the CDS counterparties and drafted the definitive settlement agreement.
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