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U.S. Treasury To Sell Remaining Stake In AIG

Filed by KOSU News in Business.
December 10, 2012

In a statement on Monday, the U.S. Treasury Department said it will launch an underwritten public offering to sell its remaining 234,169,156 common stock shares in insurer American International Group Inc., better known as AIG.

The U.S. government bought the controlling stake in the company as part of the $182 billion bank bailout in 2008. The sale would bring an end to the government’s run as the company’s largest shareholder, which represented a 16-percent ownership in the company.

The government originally said it didn’t expect to recoup the money from the bailout, but AIG promised it would it would repay. A restructuring and a return to solvency by AIG returned the government’s investment as well as a profit.

The AP reports that as of September, the Treasury and Federal Reserve had received back $197.4 billion.

AIG’s Monday closing price of $33.36 would value these remaining shares at about $7.8 billion.

Forbes had this additional analysis:

“With visibility on two uncertain elements, and with the opportunity to exit its equity stake before year-end, the time is right for the Treasury to close out its AIG position in the offering to be conducted by Bank of America Merrill Lynch, Citigroup, Deutsche Bank Securities, Goldman Sachs Group and JPMorgan Chase. Treasury will still hold warrants to purchase AIG shares issued as part of the insurer’s bailout.”

AIG shares fell 1.4 percent in after-hours trading, similar to a dip in September when the Treasury announced it was looking to sell its remaining shares in the company.

As Eyder reported at the time, it is said that the government needs to get more than $28.73 per share to break even on this portion of the bailout. [Copyright 2012 National Public Radio]

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