Ambac slumps 40 pct after Reuters scoops bondholder push for bankruptcy

Reuters broke news on June 8 that bondholders of troubled bond insurer Ambac Financial Group planned to push the company toward a pre-packaged bankruptcy that would let them swap their debt for equity. Ambac shares began falling immediately in after-hours trading, dropping as much as 16 percent before the market opened the next morning. The shares then dropped as much as 40 percent and the company’s preferred shares fell almost 18 percent. Volumes were also above average. The Reuters story on the bondholders was cited by Dow Jones Marketwatch, The Street.com, Zacks Equity Research, Seeking Alpha and others. The story was unmatched by Dow Jones and Bloomberg.