US Treasury to net $750 million more from AIG stock

The US Treasury has said it expected to receive $5.75 billion from the sale of the American International Group (AIG) stock, $750 million more than initially estimated, as the underwriters opted buying of additional shares.

Last week, the Treasury announced that it had agreed to sell around 163.9 million AIG stock at $30.5 per share with total proceeds estimated at $5 billion. AIG pledged $3 billion worth of share purchases.

On Monday, it said underwriters had exercised their over-allotment option fully to purchase around 24.6 million additional shares of AIG common stock at the public offering price of $30.5 per share, according to Xinhua.

The offering was expected to cut the Treasury's remaining investment in AIG to around $24.2 billion, which comprised around 871.1 million shares of common stock, and bring the Treasury's stake in AIG down from 61 per cent to 53 per cent.

At the height of the 2008 financial crisis, the Treasury and the Federal Reserve extended $182 billion to AIG, the cash-strapped insurance company, through the Troubled Asset Relief Program (TARP), a financial bailout programme created for the prevention of a collapse of the banking system.

The latest sale comes as a part of the Treasury's ongoing efforts to wind down the TARP, and so far nearly 83 per cent of the $416 billion funds disbursed under TARP had already been recovered, according to the statement.

According to the Treasury, it had received $23.3 billion from four sales of AIG stock so far.

With the latest sale, AIG still owed taxpayers around $24 billion on the original investment, according to Treasury estimates.