Maurice “Hank” Greenberg, the former American International Group Inc. chief executive, says the terms and conditions surrounding a government rescue loan are pushing the insurer closer to collapse with each day.
“Time is clearly running out,” said Greenberg in a letter Thursday to current Chief Executive Edward Liddy that was filed with the U.S. Securities and Exchange Commission.
Greenberg told Liddy it was imperative he try and renegotiate better terms for the company’s Sept. 16 bailout by the U.S. government.
“The current federal government loan to AIG is effectively nationalizing the company,” Greenberg said of a heavily fee-laden $85 billion loan that saved AIG from bankruptcy. The company has to repay it over the next two years with the sale of assets.
Greenberg warned that U.S. taxpayers, more than 100,000 employees and millions of investors in the company could be hurt.
“Almost all of the company’s stakeholders — except credit default counterparties — stand to lose under the current loan structure,” said Greenberg, making a reference to investment guarantees on bad mortgage debt that triggered $25 billion in losses over the past three quarters.
Greenberg warned that, under the federal loan, AIG was being forced to sell assets when market conditions make it difficult to do so.
“The current loan structure offers little hope” of the government loan being repaid, Greenberg said to Liddy. “Your prompt action is required.”
In signing off the letter, Greenberg urged Liddy to publicly comment on the issues surrounding AIG.
AIG’s government rescue gave authorities the right to take a stake of up to 80 percent, heavily diluting shareholders, including Greenberg who owned a roughly 11 percent stake through stock held in personal accounts, family trusts and companies that he controls.
AIG said it had no comment.
Liddy, the third CEO since Greenberg stepped down from AIG more than three years ago, was named CEO as part of the government rescue.
(Reporting by Lilla Zuill; Editing by Tim Dobbyn)
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