American International Group, US government-controlled after a bailout, said Wednesday it has struck a deal to speed up repayment of taxpayer dollars and reclaim independence.
AIG said it could raise as much as seven billion dollars next year by selling shares.
Under the recapitalization plan, AIG “will have the right to raise up to three billion dollars (and up to an additional four billion dollars with the consent of the Treasury Department) by August 15, 2011,” AIG said in a filing with the US Securities and Exchange Commission.
The company, 80 percent of which is owned by the government, signed Wednesday a master plan agreement with regulators including the US Treasury.
The “definitive recapitalization agreement” signed by AIG “marks an important step forward in our progress toward completely repaying taxpayers,” the company said in a statement.
“We remain committed to executing the steps and meeting all conditions in the agreement as soon as possible.”
Trading of AIG shares was briefly suspended on the New York Stock Exchange in advance of the announcement. AIG closed 3.94 percent lower at 42.22 dollars, but were up 0.86 percent in after-hours trade.
The US Treasury said the announcement was a major step forward in exiting its 80 percent stake and recouping public aid.
“Today’s announcement is a milestone in the government’s long-stated efforts to exit our investments in private companies as soon as practical while protecting taxpayers,” Tim Massad, acting assistant secretary for financial stability, said in a statement.
“We believe taxpayers will recover every dollar invested in AIG and stand a good chance of making a profit.”
The AIG announcement came a day after the Treasury sold the last of its common shares in Citigroup, recouping a cumulative profit for taxpayers of
12.0 billion dollars.
The big US bank had received a 45-billion-dollar bailout under the Troubled Asset Relief Program set up to prevent the collapse of the financial system after the Lehman Brothers bankruptcy in 2008.
In a controversial move, the Treasury extended TARP beyond the beleaguered banking sector to rescue AIG.
Once the world’s largest insurer, AIG received more than 180 billion dollars from the government to help cover investments that disappeared amid the collapse of a US real estate bubble.
In its SEC filing Wednesday, AIG said it would use the proceeds from its flotation of Asian unit AIA and selling American Life Insurance Company to repay 20 billion dollars to the Federal Reserve Bank of New York.
New York, Dec 8, 2010 (AFP)
