US Treasury to sell off $5.8bn of its AIG stake
SHARES in American International Group (AIG) slumped nearly three per cent yesterday after the US Treasury sold off almost $5.8bn (£3.6bn) of shares it acquired as part of the government’s bailout of the insurer in 2008.
The Treasury said over the weekend that it planned to sell nearly 164m shares, cutting the government’s 70 per cent stake in the firm. AIG has agreed to buy back $2bn worth of the stock.
And last night the Treasury said it expects to receive a further $750m from the sale through an over-allotment option – taking its stake down to 61 per cent.
The shares are being sold at a public offering price $30.50 per share, a seven per cent discount to Friday’s close.
In 2008, the government undertook a huge bailout of the insurer, providing $182bn in aid. The sale will be the third in 12 months, further reducing AIG’s debt to taxpayers to $30bn.
“We remain hopeful that taxpayers will ultimately recover every single dollar invested in the company, which is something few would have expected during the depths of the financial crisis,” said Tim Massad, the assistant secretary for financial stability.
And he looks set to get his wish: the Government Accountability Office last night said it expects the USA to make $15.1bn profit from the bailout.