U S West Capital Corp. sold 7.5 million shares of Financial Security Assurance Holdings Inc. in a public stock offering last week, fetching $20 per share for its stake in the bond insurer's holding company.

Trading on the New York Stock Exchange with the symbol FSA, the firm's stock closed up 1/4 point at 20 1/4 on Friday, its first day of trading. Other financial guaranty stocks ended mixed on Friday, while the Dow Jones industrial average closed down 26.47 points.

Led by Salomon Brothers Inc., underwriters on the deal were not able to secure a price in the $21 to $23 range foreseen in the company's filing with the Securities and Exchange Commission. Nevertheless, U S West Inc., U S West Capital's ultimate parent, expressed satisfaction with the initial public offering.

"We're pleased with the pricing and that the market response was so strong that the offering is oversubscribed," a U S West spokesman said. "That kind of response is a significant accomplishment in light of today's weak market when most IPOs aren't getting done and those which do are sold at significant discounts."

Institutional investors bought the majority of the offering, according to a member of the underwriting syndicate, which also included Donaldson, Lufkin & Jenrette Securities Corp. and Lehman Brothers. Large blocks of the stock were purchased by Oppenheimer Capital L.P., Waddell & Reed Inc., Prudential Insurance Co., Mutual Series Fund Inc., and Wellington Management Co., the source said.

Officials representing the buyers were either unavailable for comment, or declined to do so. Because of SEC regulations, FSA and U S West officials and members of the underwriting team were restricted from commenting on the sale.

Depending on the exercise of the overallotment option, U S West Inc. will maintain 59.5% to 62.7% ownership of FSA. Public shareholders and FSA employees will hold 22.3% to 25.5%, Fund American Enterprises Holdings Inc. will hold 7.6%, and Tokio Marine and Fire Insurance co. will hold 7.4%.

In addition to 2 million shares sold to Fund American in a pre-arranged transaction, 4.675 million were offered in the United States and Canada, and 825,000 shares were offered to international investors.

The IPO signals the beginning of the final phase of U S West's plan to get out of the financial guaranty business. Last June, U S West said it would focus on its core telecommunications industries and sell its ownership stake in FSA. In October, FSA filed for an initial public offering of 12 million shares. The filing included details of a major corporate restructuring designed to segregate FSA's troubled commercial real estate holdings from the new, publicly owned company.

In late December, Salomon Brothers attempted to price FSA's offering, but U S West was unsatisfied with the price and postponed the sale.

Last month, U S West said that it would sell the 2 million shares of FSA to Fund American and would refile with the SEC for a smaller offering. U S West also announced that Fund American Chairman Jack Byrne would become chairman of FSA once the IPO was completed.

Fund American has the rights to acquire additional shares of FSA, and sources said the firm's involvement in FSA's future helped generate interest in the stock sale.

"The solid response [to the IPO] shows the confidence investors have in Jack Byrne and FSA's management team," U S West's spokesman said.

Equity analysts generally agreed that FSA's stock sale was a success, given the state of the market and the fact that financial guaranty stocks are down significantly from their 52-week highs. But because U S West previously attempted to price FSA's offering, another equity source noted that delaying it again was not really an option even though the price was below the estimated range.

"I think they really had to do the deal. If they didn't get it done today, they probably wouldn't have ever been able to do it," the equity analyst said. "It should be a terrific buy" at $20 per share.

A member of the underwriting syndicate said "the price was around the level [U S West] wanted to come in and I think they just wanted to get it through the market."

Given U S West's plans eventually to divest itself of all of FSA, a source familiar with the development speculated that U S West's thinking was that if the company "put the IPO out now, down the road they'll get the result they want."

With the completion of the IPO, FSA joins a growing number of bond insurance firms that have public ownership. Prior to FSA's offering, Capital Guaranty Corp. was the most recent financial guarantor to offer public shares, selling 6.75 million shares last September at $21 each.

The holding companies of AMBAC Indemnity Corp., Municipal Bond Investors Assurance Corp., Capital Reinsurance Co., Asset Guaranty Insurance Co., and Enhance Reinsurance Co. have public ownership ranging from 44% to 100%.

FSA's stock sale leaves Financial Guaranty Insurance Co., which is 99% owned by GE Capital Corp.; Connie Lee Insurance Co., whose owners include Sallie Mae and the U.S. Department of Education; and Capital Markets Assurance Corp., which has more than 10 institutional owners, as the only financial guaranty firms without any public ownership.

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