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 Treasury Announces Pricing of $5.0 Billion of AIG Common Stock


5/6/2012


Offering Brings Remaining Government Investment Related to AIG down to $39 Billion – 79 Percent Reduction from Original $182 Billion Commitment

WASHINGTON – Today, the U.S. Department of the Treasury announced that it has agreed to sell 163,934,426 shares of its American International Group, Inc. (AIG) common stock at $30.50 per share in an underwritten public offering.  The aggregate proceeds to Treasury from the common stock offering are expected to be approximately $5.0 billion. As part of Treasury’s offering, AIG agreed to purchase 65,573,770 shares at the public offering price of $30.50 per share – representing $2.0 billion of Treasury’s expected proceeds from the sale.  Treasury has granted the underwriters a 30-day over-allotment option with respect to approximately 24.6 million additional shares of AIG common stock.

“We’re continuing to make significant progress exiting our investment in AIG,” said Assistant Secretary for Financial Stability Tim Massad. “We remain hopeful that taxpayers will ultimately recover every single dollar invested in the company, which is something few would have expected during the depths of the financial crisis.”

The common stock offering priced today (assuming no exercise of the underwriters’ over-allotment option) will reduce Treasury’s remaining investment in AIG to $30.7 billion, consisting of 1.084 billion shares of common stock; and  Treasury’s percentage ownership of AIG’s outstanding shares of common stock will also decline from approximately 70 percent to 63 percent. In addition, the Federal Reserve Bank of New York (FRBNY) has a remaining loan to Maiden Lane III totaling approximately $8.0 billion, without giving effect to the recently announced sales.  That FRBNY loan, plus accrued interest of approximately $700 million, is collateralized by assets with a current value well in excess of the outstanding loan balance.

During the financial crisis, overall support for AIG through Treasury and the FRBNY totaled approximately $182 billion.  After giving effect to today’s common stock sale, the government’s remaining investments of approximately $39 billion (consisting of the remaining Treasury common stock investment and FRBNY loan to Maiden Lane III) would represent a 79 percent reduction from that original $182 billion commitment.

Today’s announcement is part of Treasury’s ongoing efforts to wind down the Troubled Asset Relief Program (TARP).  More than 81 percent ($338 billion) of the $415 billion funds disbursed for TARP have already been recovered to date through repayments and other income – before including any expected proceeds from today’s announcement.  For more details on Treasury’s lifetime cost estimates for TARP programs, please visit Treasury’s Monthly 105(a) Report to Congress on TARP at this link.

BofA Merrill Lynch, Barclays, Citigroup, Credit Suisse, Deutsche Bank Securities, Goldman, Sachs & Co., J.P. Morgan, Macquarie Capital, Morgan Stanley, UBS Investment Bank and Wells Fargo Securities acted as Joint Book-Runners for the offering.  Greenhill & Co. continues to serve as Treasury’s financial agent with respect to the management and disposition of Treasury’s investment in AIG.

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