WASHINGTON (MNI) – The following was issued Thursday morning by the
Treasury Department:
TREASURY ANNOUNCES PRICING OF PUBLIC OFFERING OF AIG COMMON STOCK
Today, the U.S. Department of the Treasury announced that it has
agreed to sell 206,896,552 shares of its American International Group
(AIG) common stock at $29.00 per share. The aggregate proceeds to
Treasury from the common stock offering are expected to be approximately
$6.0 billion.
As part of Treasury’s common stock offering, AIG agreed to purchase
103,448,276 shares at the offering price of $29.00 per share –
representing $3.0 billion of Treasury’s expected proceeds from the sale.
“We’re continuing to move forward to wind down TARP and exit our
stakes in private companies as soon as practicable,” said Assistant
Secretary for Financial Stability Tim Massad. “Today is another
important step in our efforts to recover the taxpayer’s investment in
AIG.”
Yesterday, Treasury also announced an agreement with AIG that
provides for the repayment of the government’s remaining $8.5 billion
preferred equity investment in the AIG-owned entity AIA Aurora LLC (AIA
SPV) – a special purpose vehicle that holds ordinary shares in AIA Group
Limited (AIA).
Overall, the common stock offering priced today and the agreement
to fully repay Treasury’s preferred equity interest are expected to
provide at least $14.5 billion in proceeds toward repaying the
taxpayers’ investment in AIG. Those proceeds would reduce Treasury’s
remaining investment in AIG to $37.8 billion. In addition, the Federal
Reserve Bank of New York (FRBNY) has a loan to Maiden Lane III totaling
$9.3 billion. That FRBNY loan is collateralized by assets with a current
value well in excess of the outstanding loan balance.
During the financial crisis, overall support for AIG through
Treasury and the FRBNY totaled approximately $182 billion. After giving
effect to today’s common stock sale and the preferred stock repayment,
the government’s remaining investments of $47.1 billion would represent
a nearly 75 percent reduction from that original $182 billion commitment
(consisting of the remaining Treasury common stock investment of $37.8
billion and FRBNY loan to Maiden Lane III of $9.3 billion that is
collateralized by assets with a current value well in excess of the
outstanding loan value). After today’s offering and the expected full
repayment of its preferred equity interests, Treasury’s remaining
investment in AIG would consist of 1.248 billion shares of common stock.
Treasury’s percentage ownership of AIG’s outstanding shares of common
stock would decline from approximately 77 percent to 70 percent.
Today’s announcement is part of Treasury’s ongoing efforts to wind
down the Troubled Asset Relief Program (TARP). More than 77 percent
($319 billion) of the $414 billion funds disbursed for TARP have already
been recovered to date through repayments and other income – before
including any expected proceeds from today’s announcement. For more
details on Treasury’s lifetime cost estimates for TARP programs, please
visit Treasury’s Monthly 105(a) Report to Congress on TARP at this link.
Treasury engaged Citigroup Global Markets Inc., Credit Suisse
Securities (USA) LLC and Morgan Stanley & Co. LLC as Joint Global
Coordinators for the offering of AIG common stock priced today.
Greenhill & Co. continues to serve as Treasury’s financial agent with
respect to the management and disposition of Treasury’s common stock
investment in AIG.
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: MAUDS$,M$U$$$]
