Bank of America waives conditions in its offer to buy MBIA bonds
Dec 5 (Reuters) - Bank of America Corp said Wednesday that it has waived certain conditions related to its offer to buy MBIA Inc bonds, the latest move in a dispute between the two companies.
The No. 2 U.S. bank by assets offered on Nov. 13 to buy some of the insurer's bonds to thwart changes that MBIA had proposed in the terms to its debt. But on Nov. 26, MBIA said it won the necessary consent of bondholders to make the changes.
Nevertheless, Bank of America is proceeding with its offer to buy the bonds until Dec. 11, or longer, if extended. It waived conditions that could have stopped the offer from going forward.
Bank of America declined to comment. MBIA had no immediate comment.
MBIA proposed the changes to its debt on Nov. 7 to eliminate the risk that it might be considered in default if a troubled insurance unit were put into rehabilitation or liquidation by the New York State Department of Financial Services.
MBIA said at the time that if there were such a default, it would have insufficient liquidity to make good on the notes and would probably immediately pursue other actions, including bankruptcy.
Bank of America Corp, which is tangled in legal disputes with MBIA, countered with its offer, saying it believed the changes would increase the risk of MBIA's insurance unit being placed in rehabilitation or liquidation. That would jeopardize all policyholder claims, including Bank of America's, the bank said.
In the ongoing legal dispute, MBIA claims that Bank of America owes it billions of dollars over soured mortgages that it wants the bank to buy back. Bank of America says the insurer owes it billions over certain credit default swap transactions.