AIG to pay back Federal Reserve $21 billion credit line
New York, New York, United States (AHN) – The American International Group announced Wednesday it will repay the U.S. Federal Reserve $21 billion credit line. AIG will fund the repayment from the sales of two life insurers from outside the U.S.
After paying back what AIG borrowed from the regulator in 2008 at the onset of the financial crisis, the insurance giant will focus on retiring its obligations to the U.S. Treasury Department. The Treasury invested $48 billion in AIG and owns 80 percent of the company.
The Treasury said it plans to convert its AIG preferred shares into 1.66 billion shares of common stock by March 15.
The Treasury, according to reports, is planning to sell up to 20 percent of its AIG shares in the first quarter of 2011 as part of its unloading its stake in the insurance giant.
The stock offering is expected to raise at least $15 billion. The securities will be sold to private investors, similar to what the Treasury did with its Citigroup and General Motors holdings.
Since January, AIG shares gained 41 percent on the New York Stock Exchange to $42.22. If the Treasury sells its AIG stocks at $29 per share, finance experts said the Treasury will break even on its investment.
A Treasury official said the AIG action dovetails with Washington’s strategy to exit investments in private companies as soon as practical, while protecting taxpayers’ money.
View full post on All Stories
