Ambac Financial Group announced Thursday that it entered into a pair of debt-for-equity exchanges June 11, meaning that it purchased back its own debt by offering debt-holders a stake in the company.

The exchanges come as Ambac Financial, the holding company of troubled bond insurer Ambac Assurance Corp., is pondering bankruptcy. Ambac Financial has previously stated that it may decide “not to pay interest on its debt” as early as this month and that a bankruptcy proceeding could take place with or without a prepackaged agreement with major creditor groups.

Ambac Financial issued 5.24 million shares in exchange for $8.49 million of debt in the pair of agreements. The transactions, which were detailed in a filing with the Securities and Exchange Commission, concern only a fraction of its debt and represent a 1.7% stake in the company. That stake was worth $3.5 million June 11.

At the end of the first quarter, total liabilities at Ambac were $37.29 billion, against total assets of $35.82 billion. Buying back the debt should reduce the company’s liabilities and increase its policyholders’ surplus.

The $3.5 million in equity the debt-holders received is equal to about 41 cents on the dollar for the bonds. That’s higher than the 27.5 cents the bonds were trading at June 11. The value of the remaining bonds increased to 45.50 cents on the dollar Friday morning at 11:30, according to Bloomberg data. In April the bonds were at 70 cents.

The debt, originally issued in 1991, has a coupon of 9.38% and was supposed to mature in August 2011. It is rated C by Moody’s Investors Service and CC by Standard & Poor’s — indicating a likelihood of default.

The exchanges will boost the amount of common shares outstanding to 293,420,336. Ambac Financial stock was worth 69 cents per share when the deal closed June 11. The stock then climbed almost 16% last week, closing at 79 cents a share Friday.

The holding company’s value jumped on chairman Michael Callen’s remarks at the annual shareholders meeting June 14, when he said Ambac Financial had alternatives to bankruptcy.

He said that sellers of credit default swaps against Ambac, who have a natural incentive to keep the company from defaulting on its debt, may invest in order to keep Ambac stable.

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