AIG sells first stock offering after near-collapse in 2008
25 May 2011
US insurance giant, AIG, whose near-collapse in the fall of 2008 led to one of the biggest bailouts of the financial crisis, sold its first new stock offering since then, at $29 each. The company raised a total of $8.7 billion offering 300 million shares.
Yesterday's share included 200 million shares held by the government which picked up $5.8 billion and in the process lowered taxpayers' stake in the company to 77 per cent from 92 per cent.
According to treasury secretary Timothy F Geithner, the sale marked "an important milestone" in the Obama administration's attempts to sell its stake in AIG and recover bailout money.
"The decision to provide this assistance was exceptionally difficult, but it's clear today that it was essential to stopping a financial panic, preventing a severe economic collapse and helping save American jobs," Geithner said.
The government picked up a small profit of about $60 million, and the figure could rise if underwriters of the stock offering choose to exercise their option in the next month to acquire 45 million more of the government's AIG shares.
In fall 2008, the Treasury pumped in around $125 billion in AIG in a complicated, multistep bailout from the Treasury Department and the Federal Reserve. There was a possibility of the figure rising to $182 billion at one point in time.
AIG has been making repayments by selling some of its assets, such as 21st Century Insurance Co, a Woodland Hills auto insurer that AIG sold to Farmers Insurance Group in Los Angeles two years ago for $1.9 billion.
