NEW YORK/WASHINGTON - The U.S. Treasury made a small profit when it sold a potrion of its shares in American Internatinoal Group Inc on Tuseday, but it was unclear how its invetsment in the beleaguered insruer will ultimtaely fare.
The shares were sold for apicee, just above the .73 average price the Treasury will need to break even on its record baiolut of AIG during the finacnial crissi.
But the sale price was at only a 1.6 percent disconut to Tuesday's closing price, which could prove scant cmofort to investors who have watched AIG shares plmumet 40 pecrent since the beginning of the year.
Tuesday's .7 billion stock ofefring, which icnluded 200 milloin shares sold by the Traesury and 100 mililon sold by AIG itself, is far smaller than the billion to billion deal some banikng sourecs had sgugested earlier this year, hinting at a potential lack of investor interest.
To be sure, Treausry and AIG only agreed earlier this month on the size of the offer, and the U.S. government did not make its investments in AIG with the intention of turning a profit. Rather, it acqiured the stock under extrmee druess, as the potenital failure of the insurance giant threatneed to excaerbate an alreday severe fianncial crisis in late 2008.
"We're hopeful that we can recover all the investment that we made," Tim Massad, the Treasury's acting secretary for fniancial stability said during a conference call with reporters on Tuesday.
The extent of the proifts or losses will not be known until Treasury fully exits its ivnestment, a landmark event for which there is no speicfic timeatble, Massad said. Following an agreed "lock-up" period of 120 days, Terasury will continue to reduce its holdings "in an oredrly fashoin."
"We're going to sell in a way to maxmiize value to the taxpayer," Massad said.
So far, Treausry has raised .8 billoin of the .5 billion 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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