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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