New England Patriots sues Ambac over fees -reportWed Jul 16, 2008 4:49pm EDT
NEW YORK, July 16 (Reuters) - The New England Patriots football team, whose debt included auction rate securities, have filed a law suit to recover fees from bond insurer Ambac Financial Group (ABK.N: Quote, Profile, Research, Stock Buzz), the Boston Globe reported on Wednesday.
The newspaper said an affiliate of the team, NPS LLC, refinanced the debt but is suing Ambac over $2.8 million in fees.
Spokesmen for the team and for Ambac were not immediately available.
Auction rate securities are long-term securities whose rates are reset at periodic short-term auctions. The auction rate market began freezing in late January amid the credit crunch, and issuers faced unexpectedly high interest rates demanded by investors.
In February, a market source told Reuters the football team had $71 million in taxable auction rate debt.
The Patriots were forced pay a 20 percent interest rate until they switched to more frequent auctions. There was no information available on what the financing paid for.
The Boston Globe in 2001 had reported that Patriots owner Robert Kraft had financed a $300 million stadium in Foxborough, Massachusetts, via the 28-day auction rate security market, after buying insurance from Ambac that lifted the deal to "AAA." (Reporting by Joan Gralla; editing by Leslie Adler)