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What: Shares of Ambac Financial
So What: As part of the deal, Ambac Assurance agreed to drop each of its 60 claims, totaling $6.1 billion, against Lehman's bankruptcy estate. And in return, Lehman agreed to drop its claim that Ambac owes it tens of millions of dollars under several disputed derivatives transactions.
Now What: While the settlement has certainly put a charge in Ambac's shares, this Fool would caution investors about jumping in at this particular time. After all, back in March, management stated that it might have to file for bankruptcy if it can't restructure its liabilities by mid-2011. Although investors stand to make huge gains if all of Ambac's rehabbing efforts continue to go positively, there's still too much uncertainty to call it a prudent bet.
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