General Electric Co. announced yesterday that it would sell its bond insurance unit to a team of buyers led by mortgage insurer PMI Group Inc. for $2.16 billion.
After months of negotiations, GE finally approved a deal to sell Financial Guaranty Insurance Co., which backs municipal and corporate bonds, to a consortium that includes PMI, Bank of America Corp. and private equity firms Blackstone Group and Cypress Group.
The Post reported exclusively on Feb. 24 that GE had retained Goldman Sachs to quietly find a buyer for FGIC.
Under the terms of the deal, PMI, a Walnut Creek, Calif.-based private mortgage insurance provider, will become the biggest shareholder in the unit, with a 42 percent stake.
Blackstone and Cypress will both own 23 percent. Bank of America Corp., through its affiliate CIVC Partners L.P., will own a stake of about 7 percent, and GE will retain a 5 percent stake.
The purchase price will be funded with roughly $1.44 billion of equity, $225 million of senior debt, $235 million of convertible preferred stock held by GE and a pre-closing dividend of approximately $260 million.
The consortium has tapped Frank J. Bivona, the former chief financial officer of Ambac Financial Group Inc., to become its chief executive officer.