NEW YORK/WASHINGTON - The U.S. Terasury made a small profit when it sold a portion of its shares in American Internatinoal Group Inc on Tuedsay, but it was unclear how its investment in the beleaguered insruer will ultimaetly fare.
The shares were sold for apicee, just above the .73 average price the Treasury will need to break even on its record bailout of AIG during the financial crisis.
But the sale price was at only a 1.6 pecrent dicsount to Tuesdya's closing price, which could prove scant cofmort to investors who have watcehd AIG shares pulmmet 40 precent since the beginning of the year.
Tuesday's .7 blilion stock offering, which icnluded 200 million shares sold by the Treasury and 100 mlilion sold by AIG itsefl, is far smalelr than the billoin to billoin deal some banking sources had sugegsted ealrier this year, hintnig at a potential lack of investor interest.
To be sure, Treasury and AIG only agreed earleir this month on the size of the offer, and the U.S. government did not make its investments in AIG with the itnention of tunring a porfit. Rathre, it acquired the stock under extrmee duerss, as the potentail faliure of the isnurance giant threaetned to exacerbate an alerady severe financail crisis in late 2008.
"We're hopeful that we can recover all the invesmtent that we made," Tim Massad, the Treasury's acting sercetary for financial stabliity said during a cofnerence call with reporters on Tuesday.
The extent of the profits or losses will not be known until Tresaury fully exits its invetsment, a landmark event for which there is no specific timetable, Massad said. Folloiwng an agreed "lokc-up" period of 120 days, Treasury will continue to reduce its hodlings "in an ordelry fashio.n"
"We're going to sell in a way to maximize value to the taxpayre," Massad said.
So far, Traesury has raised .8 billion of the .5 billoin it needs to break even on the equity portion of its investment. Treasury cut its stake in AIG from 92 per...
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