US Tsy: To Offer $6B AIG Common Stk; $3B to Be Bought by AIG

Author: Market News International | Category: News

WASHINGTON (MNI) – The following was issued by the Treasury
Department late Wednesday:


Today, the U.S. Department of the Treasury (Treasury) announced
that it has launched an offering of $6 billion of its American
International Group (AIG) common stock. AIG has indicated that it
intends to purchase up to $3 billion of the common stock sold by
Treasury in this offering at the initial public offering price.

Treasury also announced an agreement today 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). AIG is expected to repay this remaining $8.5 billion (plus
accrued preferred return) from the following sources:

–$5.6 billion in expected proceeds from AIG’s recently announced
sale of ordinary shares of AIA, which transaction priced on March 5,
2012 and is scheduled to close on March 8, 2012 (subject to customary
closing conditions). Proceeds from this transaction are expected to be
delivered to Treasury in the coming days.

–$1.6 billion in expected proceeds from the Federal Reserve Bank
of New York’s (FRBNY) final disposition of Maiden Lane II LLC securities
announced on February 28, 2012. Proceeds from this transaction are
expected to be delivered to Treasury the week of March 19. (These
expected proceeds are in addition to the $2.8 billion net gain that the
FRBNY realized on the Maiden Lane II portfolio.)

–$1.6 billion in escrowed cash proceeds (MET Escrow) from AIG’s
sale of its American Life Insurance Co. (ALICO) subsidiary to MetLife,
Inc. that are expected to be released in two tranches: approximately
$1.0 billion, subject to certain reserve amounts, by November 2012 and
the remainder by May 2013.

Following receipt of the proceeds from the AIA share sale and the
Maiden Lane II portfolio disposition, Treasury will release security
interests in other AIG assets that currently support repayment of its
AIA SPV preferred equity interest. These assets include AIG’s remaining
ownership interest in AIA and AIG’s equity interests in its wholly owned
subsidiary International Lease Finance Corporation. AIG’s interests in
Maiden Lane III LLC and the MET Escrow will continue to support
repayment of Treasury’s AIA SPV preferred equity interests until they
are fully repaid, which AIG has agreed will occur no later than May

The announcements today are part of Treasury’s ongoing efforts to
exit its investment in AIG, recover taxpayer dollars, and wind down the
Troubled Asset Relief Program (TARP). After the expected repayment of
Treasury’s remaining $8.5 billion AIA SPV preferred equity interest –
and before accounting for any expected proceeds from today’s proposed
common stock offering – Treasury’s remaining outstanding investment in
AIG would total approximately $41.8 billion. In addition, the 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.

Treasury has 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 announced today.

AIG has filed a registration statement (including a prospectus)
with the Securities and Exchange Commission (SEC) for the offering to
which this communication relates. Before individuals invest, they should
read the prospectus in that registration statement and other documents
that AIG has filed with the SEC for more complete information about AIG
and this offering. Individuals may get these documents for free by
visiting EDGAR on the SEC Web site at Alternatively, AIG,
any underwriter or any dealer participating in the offering will arrange
to send an individual the prospectus if they request it from Citigroup
Global Markets Inc. by calling toll-free at 1-800-831-9146, Credit
Suisse Securities (USA) LLC told free at 1-800-221-1037 or Morgan
Stanley & Co. LLC toll-free at 1-866-718-1649.

** Market News International Washington Bureau: 202-371-2121 **

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