Treasury to Sell Even More of Its AIG Shares

by Christopher Freeburn | September 10, 2012 10:45 am

The U.S. Treasury Department will sell another $18 billion worth of American International Group (NYSE:AIG[1]) common shares to institutional investors[2].

With the sale, the government will recover more of the $182 billion it spent to bail out the insurance provider back in 2008, when the collapse of mortgage-backed securities threatened to sink it, the Associated Press noted.

After the sale, the government’s stake in the insurance giant will fall from 53% of outstanding shares currently to less than 20%. That will mark the first time since the bailout that the government’s stake in AIG will less than 50%.

This will be Treasury’s fifth sales of AIG shares[3] in the last few years. So far the government has recouped $23.3 billion of the bailout, reducing its AIG common share holding from 92% right after the bailout.

Shares of AIG fell about 2% in Monday morning trading.

AIG has been profitable for two years. Company officials say it has repaid most of the money spent on the bailout.

The government will also offer a 30-day option to underwriters for an additional purchase of $2.7 billion in additional AIG common stock, should the initial sale go well.

Pricing for the common shares has yet to be announced, but AIG indicated that it would purchase $5 billion of the shares.

Endnotes:
  1. AIG: http://studio-5.financialcontent.com/investplace/quote?Symbol=AIG
  2. common shares to institutional investors: http://hosted.ap.org/dynamic/stories/U/US_AIG_TREASURY_SALE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-09-09-20-29-12
  3. Treasury’s fifth sales of AIG shares: http://investorplace.com/2012/09/should-you-buy-aig-as-uncle-sam-sells/

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