Treasury Gains in Sale of AIG Stock

August 7, 2012

American International Group Inc. said today hat the U.S. Department of the Treasury expects to receive an additional $750 million in addition to its previous estimate of $5 billion from its underwritten public offering of AIG common stock. The underwriters have exercised their over-allotment option in full to purchase 24,590,164 additional shares of AIG common stock at the public offering price of $30.50 per share.

Last Friday, Treasury had priced an offering of 163,934,426 shares of its AIG common stock at the public offering price of $30.50 per share. In connection with Treasury’s offering, AIG agreed to purchase 98,360,656 shares of AIG common stock in the offering at the public offering price for an aggregate purchase amount of approximately $3.0 billion.

Combined with the exercise of the over-allotment option, Treasury’s proceeds from the public offering are now expected to be approximately $5.75 billion and the total number of shares sold in the offering is expected to be approximately 188.5 million.

The offering is expected to reduce Treasury’s remaining investment in AIG to approximately 871.1 million shares of common stock; and reduce Treasury’s percentage ownership of AIG’s outstanding shares of common stock from 61 percent to approximately 53 percent.

When this offering is completed, it is anticipated that Treasury will have sold approximately 784 million shares of AIG common stock since May 2011 for total proceeds of approximately $23.3 billion. Treasury also announced that in addition to principal repayments, the Federal Reserve and Treasury have also received additional income beyond that from interest, fees, and other gains. That additional income beyond principal repayments totals $14 billion, including approximately $13 billion from the Federal Reserve’s investment and approximately $1 billion from Treasury’s investment.

The sale is is part of Treasury’s efforts to wind down the overall Troubled Asset Relief Program (TARP). Treasury said that 83 percent ($344 billion) of the $416 billion funds disbursed for TARP have been recovered to date through repayments and other income – before this latest sale of AIG stock.

Latest Comments

  • August 8, 2012 at 1:08 pm
    Sarah says:
    Always questionable when the majority shareholder is both the seller and the buyer of shares of stock. Seems to me, the deal could be what ever the Government wants it to be.... read more
  • August 7, 2012 at 4:04 pm
    D says:
    Read up on warrant rights, bro. The Fed makes a nice chunck of chenge when they sell the stock. They dictated the buy price way back when this deal was formulated. I unders... read more
  • August 7, 2012 at 2:39 pm
    Baxtor says:
    I wonder if the Federal Government will allow AIG to not pay any taxes again this year. I know that sure would help me pay a premium for other items and maybe even buy a new ... read more
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