by Calculated Risk on 2/18/2008 10:20:00 PM

From the WSJ: Ambac Hopes Capital Infusion Will Save Rating

Ambac ... is discussing a plan to raise at least $2 billion ... The extra cash, to be raised by selling shares to existing investors at a discount, would likely be a prelude to a trickier and lengthier move: splitting itself into two businesses.

The article discusses at length several of the difficult issues related to splitting the business:

Splitting the business between its municipal-bond and its riskier structured-finance operations ... would be financially and legally messy. It would pit policyholders and shareholders against both each other and regulators, and rankle investors, some of whom have been wagering through the credit-derivatives market that bond insurers would fail and default on debt.

So many different parties, and so many different and divergent interests, makes unscrambling the egg very difficult.