U.S. Treasury to sell remaining stake with AIG
Washington, DC, United States (4E) – The U.S. Treasury Department announced on Monday that it plans to sell the last of its stake in insurer American International Group (AIG), which received bailout money from the federal government during the financial crisis .
An underwritten public offering was launched on Monday by the Treasury for its remaining 234 million shares with AIG. Over the past two years, the agency’s stake with the company has fallen after a number of sales.
The offering comes four years after a crippling crisis that put AIG in financial dire straits that required a government bailout that reached $182bn. At one point, the government’s stake at the firm reached 92 per cent.
Although bookrunners that included Bank of America, Goldman Sachs, Citigroup, JPMorgan and Deutsche Bank were still pricing the sale on Monday, the value of the Treasury’s position stood at $7.7bn, which means that the government will yield a profit on the bailout.
After the offering is completed, the Treasury will still hold warrants that it can use to buy AIG stock in the future.
In 2008, AIG nearly failed after counterparties asked for additional collateral worth billions of dollars to support credit default swaps written by the company.
Convinced that AIG’s failure would cause further turmoil in the markets, the Bush administration and the Federal Reserve decided to rescue AIG, providing the insurer with $182bn of support in the form of loans and guarantees.