One of the proposed plans to save Ambac is the issuance of additional stock shares, to be offered to existing investors at a discount. See Wall Street Journal, "Ambac Hopes Capital Infusion Will Save Rating," 2/19/2008. This influx of capital would help Ambac pay off its debts and retain its credit rating - but it would be bad news to Ambac's shareholder in the short term, as the discounted shares would bring down the overall, per-share value of the company. All of the monoline insurance firms are so desperate to raise capital that they won't be able to do so under fair conditions, and will instead have to offer these types of discounted deals to investors to convince them to take on the risk of an investment in a bond insurer and its plummeting stock value.
