<SEC-DOCUMENT>0000898822-16-000340.txt : 20160616
<SEC-HEADER>0000898822-16-000340.hdr.sgml : 20160616
<ACCEPTANCE-DATETIME>20160419134430
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000898822-16-000340
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20160419

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMBAC FINANCIAL GROUP INC
		CENTRAL INDEX KEY:			0000874501
		STANDARD INDUSTRIAL CLASSIFICATION:	SURETY INSURANCE [6351]
		IRS NUMBER:				133621676
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		ONE STATE ST PLZ
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10004
		BUSINESS PHONE:		2126680340

	MAIL ADDRESS:	
		STREET 1:		ONE STATE ST PLZ
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10004

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AMBAC INC /DE/
		DATE OF NAME CHANGE:	19930328
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<div style="TEXT-ALIGN: center">[Wachtell, Lipton, Rosen &amp; Katz Letterhead]</div>

<div style="TEXT-ALIGN: center">&#160;</div>

<div style="TEXT-ALIGN: center">April 19, 2016<br>
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<div style="MARGIN-BOTTOM: 6pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left; MARGIN-TOP: 12pt"><u>VIA EDGAR AND FEDERAL EXPRESS</u></div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">United States Securities and Exchange Commission</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Division of Corporation Finance</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Office of Mergers and Acquisitions</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">100 F Street, N.E.</div>

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<td style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: 31.7pt; VERTICAL-ALIGN: top; FONT-WEIGHT: bold; align: right">Re:</td>
<td style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; WIDTH: auto; VERTICAL-ALIGN: top; FONT-WEIGHT: bold; TEXT-ALIGN: left">Ambac Financial Group, Inc.<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
</font>PREC14A filed April 18, 2016<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
</font>PREC14A filed April 15, 2016<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
</font>DEFA14A filed April 18, 2016<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
</font> File No. 1-10777</td>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Dear Ms. Chalk:</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; TEXT-INDENT: 36pt">This letter relates to comments received by Ambac Financial Group, Inc.&#160; ("<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; FONT-STYLE: italic">Ambac</font>", the "<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; FONT-STYLE: italic">Company</font>", "<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; FONT-STYLE: italic">we</font>," "<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; FONT-STYLE: italic">us</font>" or "<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; FONT-STYLE: italic">our</font>") from the staff of the Division of Corporation Finance (the "<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; FONT-STYLE: italic">Staff</font>") of the Securities and Exchange Commission (the "<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; FONT-STYLE: italic">Commission</font>") by letter dated April 18, 2016, with respect to the filings listed above.&#160; All defined terms have the same meaning as in the proxy statement listed above.</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; TEXT-INDENT: 36pt">For your convenience, each response is prefaced by the exact text of the Staff's comment in bold text.&#160; All references to page numbers and captions correspond to the Proxy Statement unless otherwise specified.</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left"><u>Preliminary Proxy Statement filed on April 18, 2016</u></div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left"><u>General</u></div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">We note your statement that "stockholders representing more than 20% of Ambac's stock showed public support for [the appointments of David Herzog and Ian Haft to the Board of Directors]." You have made similar statements in additional soliciting material, including one where you identify Raging Capital as one of the shareholders who has expressed support for the Board and rejected Canyon Capital's nominees.</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left; TEXT-INDENT: 36pt">Revise your proxy statement to clarify:</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">Which shareholders have publicly supported your nominees and to describe the context in which they have done so;</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">To differentiate between support for the appointments of Messrs. Haft and Herzog versus for all of the Company's director nominees in this proxy contest;</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">To clarify whether the 20% figure includes shareholders who are a party to the Support Agreements holding 18.5% of the Company's outstanding shares and who, pursuant to those agreements, are contractually obligated to support the Company's nominees in connection with the settlement agreement with Ambac whereby Messrs. Haft and Herzog were appointed to the Board of Directors;</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">To note that the Support Agreements were entered into to settle a proxy contest these shareholders threatened, and that the appointments of Messrs. Herzog and Haft were part of that settlement process; and</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold">(To the extent that shareholders who have expressed support for the Company's nominees are not contractually bound to do so), to note that shareholders who have expressed support for the Company's nominees may nevertheless revoke any proxies granted to the Company through the meeting date</font>.</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; TEXT-INDENT: 36pt">In response to the Staff's comment, Ambac has revised the Proxy Statement to include the requested clarifications regarding the support received from Ambac stockholders.&#160; Please see the cover letter from Jeff Stein and pages 11 and 12.&#160; In response to the second "dash-point" of the Staff's comment, the Staff is respectfully advised that for the five stockholders that entered into the Support Agreements, and the one stockholder that indicated support via press release, there is no differentiation among directors. Each of these stockholders supports the Company's full slate of 6 nominees.</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">In additional soliciting materials including a press release dated April 11, 2016, you have made assertions and allusions to an approach by a broker offering to sell Ambac a package of Ambac-insured mortgage backed securities "matching Canyon's publicly disclosed CUSIP numbers and position sizes, at a 17% premium to market value.&#160; An attempt we saw as greenmail and immediately rejected out of hand." In its soliciting materials, Canyon has disputed that it was behind such an approach but you have continued to state that there is no other plausible explanation for the offer, given its specificity.&#160; Rule 14a-9 prohibits statements in soliciting materials that are unsupported and are therefore misleading.&#160; In your revised proxy statement, include disclosure noting (if true) that you have no proof that Canyon was behind this solicitation by the broker and that Canyon has publicly stated it was not.&#160; Your revised disclosure should note that Canyon's holdings are public information, such that the "specificity" of the offer for the Company to repurchase would appear not to be indicative of the identity of the party behind it.&#160; Include any additional support for the assertions you have made.&#160; We may have additional comments.</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; TEXT-INDENT: 36pt">The Staff is respectfully advised that the belief asserted in the referenced disclosure is properly supported, and the Company has now disclosed such support.&#160; Specifically, as disclosed in on page 24 of our material filed on Monday, April 18, 2016 (titled "Canyon's Attacks vs. the Real Facts"), the Company received an email from the broker that included: (1) CUSIP-level information for each security being offered, (2) a price for each individual security and (3) a statement that reads, in part: "The seller would like to move [the securities] together . . .", which indicated that the broker had been directed by the seller of the securities.</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; TEXT-INDENT: 36pt">Based on these facts, and the Company's knowledge and familiarity with the market for these types of securities, the Company believed, and continues to believe, that there is no plausible explanation other than the seller being directly involved.</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; TEXT-INDENT: 36pt">Our material filed on Monday, April 18, 2016, states the three points referenced above, followed by the following disclosure:</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-LEFT: 36pt">"Given the specificity of the communication, the dynamics of the market (particularly the relative illiquidity of the securities) and the unlikelihood of a broker offering the securities at such a large premium without the explicit authorization of the owner to show them at that price, we believe there is no plausible explanation other than the seller being directly involved"</div>

<div style="MARGIN-BOTTOM: 12pt; TEXT-ALIGN: left; TEXT-INDENT: 36pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">The Company is <font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><u>not</u></font> planning to include any discussion or reference to this topic at all in our proxy statement; accordingly, no change has been made to the proxy statement in connection with Staff's Comment #5.<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><br>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left"><u>DEFA14A filed April 18, 2016 &#8211; Letter to Stockholders dated April 18, 2016</u></div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">See comment 1 above regarding the need to clarify your statements regarding the support of 20% of Ambac's shareholders.&#160; Provide dates and context for the cites for the relevant shareholders on page 3 of the letter to stockholders.</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; TEXT-INDENT: 36pt">As noted, in response to the Staff's comment, Ambac has revised the Proxy Statement to include the requested clarifications regarding the support received from Ambac stockholders.&#160; For ease of reference, the Staff is advised:</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">On March 28, 2016, Ambac entered into separate Support Agreements with each of Cornwall, Alden, Axonic, Evermore and Sterling Grace. In the aggregate, these stockholders represent approximately 18.5% of Ambac<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #000000">'</font>s outstanding common stock as of March 28, 2016.</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">On March 30, 2016, Raging Capital Management, LLC ("Raging Capital"), which held 2.4% of Ambac's outstanding common stock as of March 30, 2016,&#160; publicly issued a press release stating that it was pleased with the Company's entry into the Support Agreements and fully supports the Board's recommended slate of six directors up for election at the 2016 Annual Meeting.</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">You assert that Canyon "is focused on expeditiously monetizing the value of its credit holdings through a liquidation strategy, not on creating value for all stockholders." Please provide support for your assertion that Canyon espouses a "liquidation strategy." Is proxy materials do not support this view.&#160; Alternatively, avoid this kind of unsupported allegation in future soliciting materials.</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; TEXT-INDENT: 36pt">The Staff is respectfully advised that this disclosure was caveated as a belief and, furthermore, the Company believes that this disclosure is very clearly supported from Canyon's own statements.&#160; Specifically,</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">On Slide 9 of Canyon's March 14, 2016 presentation, Canyon states plainly: "management should focus on<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold"> liquidating and returning capital</font>."&#160; (emphasis added)</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">More generally, in Canyon's March 14, 2016 presentation, in its April 13, 2016 presentation, and in most if not all of its solicitation materials in between, Canyon emphasizes that Ambac management should pursue, or Canyon's nominee(s) will pursue, a strategy to maximize return of capital as quickly as possible, and these materials make clear that its primary strategy for deploying capital and returning capital is to commute or buyback Ambac's credit obligations in the near term.&#160; See, for example, slide 3 and 7 of the March 14, 2016 presentation and slides 6 and 8 of Canyon's April 13, 2016 presentation.</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Finally, we note that Canyon has communicated this theme to the Company in letters to the Company, including, for example, a letter on December 17, 2015 in which Canyon wrote: "We also feel strongly that the Board and senior management (including a new CEO) should focus primarily on accelerating risk reduction.&#160; It appears the only material reductions of risk over the last year have been the result of natural run-off.&#160; We continue to have several recommendations as to how to proactively reduce risk: through claim buybacks, commutations and by publicly addressing its Puerto Rico Disclosure."</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">On a supplemental basis, provide support for the facts and figures regarding the Company's operational and financial performance included in the letter to stockholders.</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; TEXT-INDENT: 36pt">In response to the Staff's comment, Ambac will provide under separate cover, on a supplemental basis, support for the facts and figures included in the letter.</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; TEXT-INDENT: 36pt">Pursuant to your request, in connection with responding to these comments, we acknowledge that:</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify">we are responsible for the adequacy and accuracy of the disclosure in the filing;</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify">Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify">we may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.</div>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left; MARGIN-TOP: 12pt; TEXT-INDENT: 36pt">Please direct any questions that you have with respect to the foregoing or if any additional supplemental information is required by the Staff, please contact me at 212-403-1343 or Steve Rosenblum at 212-403-1221 or either of us by email at <font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">MGordon@wlrk.com</font> or SARosenblum@wlrk.com.</div>

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<div>Very truly yours,</div>
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<div>/s/ Mark Gordon</div>
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<div>&#160;</div>
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<td style="WIDTH: 67.33%">Mark Gordon</td>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify">Enclosures</div>

<div style="TEXT-ALIGN: left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">cc:</font><font id="TRGRRTFtoHTMLTab" style="FONT-SIZE: 1px; WIDTH: 36pt; DISPLAY: inline-block">&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">Stephen Ksenak, Ambac Financial Group, Inc.</font></div>

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