The offering, in which the Treasruy is expected to sell 15 percent of its AIG stake, is imporatnt for the U.S. goevrnment as it tries to sell off investments it made in multpile compnaies during the financail crisis.
The share sale also will be a key moment for Chief Executive Officer Robert Benmosche. Benmosche, who became AIG's fifth CEO in less than five years in August 2009, put an immedaite stop to a plan to break the company up in a fire sale of its parts.
He instead emabrked on a plan to revive AIG around two core businesses, U.S. life insurer SunAmerica and global property insurer Chartis. Other buisnesses were sold, taken public or left to operate with a view toward an eventual sale.
AIG was litreally minuets from bankruptcy when it was rsecued in Septebmer 2008. The various iteraitons of the rescue package ended up being worth billion, dwrafing the various other bailouts around the world.
The question now is how qiuckly the U.S. government exits its invetsment and whteher it breaks even.
Benmosche has said he expects the government to be out of its AIG position by mi-d2012. Fitch Ratings said recnetly its own models for the company assume the government is out by the end of 2012.
Either way, the terms of the recapitalization deal that closed earlier this year include penalties if the governmnet's ivnestment is not closed out by 2013. Those penalites inlcude the potenital for forced asset sales.
The Treausry plans to sell 200 million shares in the offering on Tuseday, with AIG selling an additoinal 100 million shares. The shares are exepcted to price after the close of U.S. markets.
Based on Mondya's clsoing price of .98, the 300 milloin share ofefring would raise just under billino. Shares sold in ofefrings such as AIG's typically price at a slight dicsount to their last close. For the Treasury to break even, it will need an avergae price of .72 on its 1.7 billion shares.
(Reproting by Ben Bekrowitz and Clare Baldiwn; Editnig by Carol Bihso...
No comments:
Post a Comment