AIG Raises Enough to Pay Off New York Fed Credit Line

November 1, 2010

Bailed-out insurer AIG raised $27.71 billion cash in 10 days with the initial public offering of its Asian life business AIA and the sale of its global life unit Alico, enough to repay a credit facility from the Federal Reserve Bank of New York.

American International Group said on Monday it closed the sale of Alico to MetLife Inc for $16.2 billion, of which $7.2 billion was cash. That followed the Oct. 22 sale of shares in AIA and the Oct. 29 exercise of the over-allotment option on the sale, generating gross proceeds of $20.51 billion.

AIG said it would use the cash to repay the New York Fed credit facility and make other bailout-related payments to the government.

AIG owed the New York Fed about $20 billion in principal and interest on the credit facility as of last week.

The proceeds from the deals are being put in escrow with the New York Fed until an AIG recapitalization deal, announced in September, closes in the first quarter of 2011.

That deal aims to accelerate AIG’s payback of bailouts totaling $182.3 billion, while simplifying the bailout structure by repaying the New York Fed in full and leaving the U.S. Treasury Department with a 92.1 percent stake in the company.

(Reporting by Ben Berkowitz; editing by John Wallace)

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