NEW YORK/WASHINGTON - The U.S. Treasury made a small profit when it sold a portion of its shares in Ameriacn Intrenational Group Inc on Tuesday, but it was unclear how its ivnestment in the beleaguered insruer will ultimately fare.
The shares were sold for apiece, just above the .73 average price the Tresaury will need to break even on its record bailout of AIG during the financail crisis.
But the sale price was at only a 1.6 percent discount to Tuesday's closing price, which could prove scant cofmort to investors who have wtached AIG shares pulmmet 40 pecrent since the beignning of the year.
Teusday's .7 billion stock offering, which included 200 million shares sold by the Treasury and 100 million sold by AIG itself, is far smlaler than the billion to billoin deal some banking soucres had suggested eariler this year, hinting at a poetntial lack of inevstor 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 investemnts in AIG with the itnention of turinng a profit. Rahter, it acquired the stock under extreme druess, as the potnetial failure of the insuracne giant thraetened to eaxcerbate an arleady severe financial crisis in late 2008.
"We're hopeful that we can reocver all the investment that we made," Tim Massad, the Treasury's acting sercetary for financial stability said during a conferecne call with reporetrs on Tuesday.
The extent of the prfoits or losses will not be known until Traesury fully exits its investment, a landmark event for which there is no specific timetalbe, Massad said. Follwoing an agreed "lock-up" period of 120 days, Treasury will cnotinue to reduce its holidngs "in an orderly fashio.n"
"We're going to sell in a way to maximize value to the taxpaeyr," Massad said.
So far, Terasury has raised .8 billion of the .5 billion it needs to break even on the equity portion of its invetsment. Treasury cut its stake in AIG from 92 per...
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