AIG finalizes plans to cut US stake

The Treasury Department will convert the $49 billion it holds in preferred shares to common shares.

By TheStreet Staff Sep 29, 2010 9:04AM

By Joseph Woelfel, TheStreet

 

American International Group (AIG) is finalizing a plan to accelerate the process of paying back taxpayers and reducing the government's majority ownership in the insurance company, The Wall Street Journal reports, citing people familiar with the matter.

 

Under the plan, the Treasury Department would convert $49 billion of the AIG preferred shares it holds to common shares that can be distributed or sold to private investors over time, sources told the newspaper.

 

The conversion, which could take place at about $35 per AIG share, is likely to occur in the first half of 2011 and is expected to happen after AIG pays back its secured debt to the New York Federal Reserve, the Journal reports. The government's ownership in AIG would likely rise to more than 90% before it is reduced gradually.


AIG shares closed Tuesday at $37.32.

The exact price at which the Treasury converts its preferred shares to common shares would determine how much of AIG the government would own as a result, the Journal reports.

 

The plan needs approval from the board of AIG, Treasury, Federal Reserve and three trustees who oversee the government's current 79.8% ownership interest in AIG, the Journal notes.

 

The groups are trying to come to an agreement on the terms of the plan as soon as Wednesday, when AIG's board is scheduled to meet in New York with Treasury and New York Federal Reserve officials, the Journal reports.

 

AIG's outstanding balance of assistance from the U.S. government totaled $132.1 billion as of June 30, according to The Associated Press.

 

Related Articles

 

4Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market finished the Wednesday session on a modestly lower note, but it is worth mentioning today's retreat took place after six consecutive gains. The Dow Jones Industrial Average (-0.1%) and S&P 500 (-0.2%) settled not far below their flat lines, while the Nasdaq Composite (-0.8%) lagged throughout the session.

Equity indices started the day in the red, with the Nasdaq showing early weakness as large cap tech names and biotechnology weighed. The technology ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Sponsored by:

VIDEO ON MSN MONEY