Treasury Launches $6 Billion of AIG Stock

[Porker]

By ERIK HOLM And SERENA NG

 

The Treasury Department launched a sale of as much as $6 billion of American International Group Inc. stock, in a move that stands to further reduce the U.S. government's stake in the New York-based insurer more than three years after the company's government rescue during the financial crisis.

 

Bankers were discussing a price of $29 a share with investors on Wednesday evening, according to people familiar with the matter, who also said the offering is expected to be completed and priced by Thursday morning.

 

AIG, which has bounced back from the brink of collapse and expects steady profits in coming years, will itself buy as much as $3 billion of the shares the Treasury is selling. That buyback could help prevent Treasury's sale from weighing on AIG's share price.

 

In addition, AIG will fully repay the government's remaining $8.5 billion preferred interest in another bailout-era vehicle that was collateralized by AIG's minority portion of Asian life insurer AIA Group Ltd. and other assets. The majority of the funds AIG will use in the transaction will come from the sale of a portion of its stake in AIA scheduled to close Thursday.

 

The U.S. government bailed out AIG in 2008 with a record bailout that required up to $182.3 billion in taxpayer support. A large chunk of the money has been repaid, and Treasury needs to recoup $41.8 billion from selling its majority stake in AIG.

 

"The people of AIG have achieved another significant milestone in our progress toward our goal that American taxpayers recoup their entire investment in AIG at a profit," said AIG Chief Executive Robert Benmosche.

 

The Treasury said the sale is part of its "ongoing efforts to exit its investment in AIG, recover taxpayer dollars and wind down" the Troubled Asset Relief Program.

 

Treasury named three different Wall Street banks to lead the share offering. It said units of Citigroup Inc., Credit Suisse Group AG and Morgan Stanley would jointly coordinate the offering.

 

The last offering, in May 2011, which didn't go as well as AIG and Treasury officials had hoped, was led by Bank of America Corp., Deutsche Bank AG, Goldman Sachs Group Inc. and J.P. Morgan Chase & Co . In the months following that sale, Mr. Benmosche said there would likely be changes to the lineup of top underwriters.

 

AIG shares have climbed 27% this year. Last month, the company reported fourth-quarter earnings that included a large tax benefit, reflecting expectations that the company will generate billions of dollars in profits in the coming years.

 

AIG shares rose 40 cents Wednesday to $29.45 in New York Stock Exchange composite trading, before falling 45 cents to $29 in after-hours trading. At Wednesday's closing price, the stock has risen 54% from its 52-week low last October.

 

Treasury currently owns about 77% of AIG. If Treasury again finds buyers for the shares for $29 each and AIG buys half and retires the stock, Treasury would reduce its common stake to about 70%.

 

Treasury last sold AIG shares in May 2011 at $29 apiece. Officials put off further sales late last year when the insurer's share price sank well below $28.73 per share, the amount the Treasury Department has said it needs to get to break even on a sale, amid a broader rout in stocks.

[Wyfitms]

Any news on Greenberg's lawsuit against the Feds?

 

Astonishing drop for AIG - from $60+ to less than a dollar... No wonder greenberg was so pissed

 

 

[Porker]

United States government seeked dismissal of lawsuit. Ongoing

[Wyfitms]

  On 3/8/2012 at 9:22 AM, Porker said:

United States government seeked dismissal of lawsuit. Ongoing

 

dunno if US judiciary as impartial as what we have in sg

[Porker]

  On 3/8/2012 at 9:30 AM, Wyfitms said:

dunno if US judiciary as impartial as what we have in sg

 

The system over at the other side of the Pacific is definitely impartial. That's not to say that judges can't be swayed but its less likely to happen. Very much less so.