PURCHASE, N.Y.--(BUSINESS WIRE)--MBIA Inc. (NYSE:MBI) today announced that its wholly-owned subsidiary, MBIA Insurance Corp. (MBIA Corp.), has accepted a binding commitment letter dated November 25, 2016, from certain holders of 14% Fixed-to-Floating Rate Surplus Notes of MBIA Corp., and from the Company, pursuant to which the surplus noteholders or their affiliates have agreed, subject to the satisfaction of certain closing conditions, to provide senior financing of up to $325 million and the Company has agreed to provide subordinated financing of $38 million to MBIA Corp. (the Facility). MBIA Corp. will use the proceeds of the Facility, together with approximately $60 million from its own resources, to pay an anticipated claim on its insurance policy insuring certain notes (Zohar II Notes) issued by Zohar II 2005-1, Limited and Zohar II 2005-1 Corp. (Zohar II), which mature on January 20, 2017. In addition to the $38 million of subordinated financing to be provided by the Company described above, the Company has agreed to provide up to an additional $50 million of subordinated financing to MBIA Corp. under the Facility, if needed, to provide additional liquidity to MBIA Corp. The Facility will be secured by MBIA Corp.’s rights to reimbursement and recovery with respect to the claim it paid under its policy insuring the class A-1 and A-2 notes issued by Zohar CDO 2003-1, Limited Zohar I, and its rights to reimbursement and recovery with respect to any claim paid under its policy insuring the Zohar II Notes.

Anthony McKiernan, MBIA Corp.’s President and Chief Financial Officer noted, “This financing, together with MBIA Corp.’s acquisition of the Zohar II Notes from Assured and the use of its own resources, will enable MBIA Corp. to satisfy its obligations on the Zohar II Notes on January 20, 2017. The Zohar I Notes defaulted in November 2015 and the Zohar II Notes are expected to default in January, which represents approximately $1.3 billion in defaulted Zohar notes. We remain prepared to work with Patriarch Partners and the collateral manager of the Zohar entities to institute a transparent and comprehensive plan to sell or refinance the assets owned by the Zohar entities in an orderly manner to ensure that their obligations are fully satisfied. While we believe that a consensual approach is preferable and in the interest of all parties, in the absence of the implementation of a good faith plan, we will continue to aggressively seek to enforce our rights to the full reimbursement of the insurance claims we paid.”

MBIA Inc. is a holding company whose subsidiaries provide financial guarantee insurance for the public and structured finance markets. Please visit MBIA's website at www.mbia.com.