(BBC) – American International Group (AIG), the troubled giant US insurer, is to repay one of the emergency rescue loans it received during the financial crisis.
It will repay the remaining $21bn outstanding from a $91bn loan from the Federal Reserve Bank of New York.
The move will pave the way for the US Treasury to sell a fifth of the insurer on the stock exchange early next year.
The Treasury currently owns 80% of AIG, although this will rise to some 92% before the planned share selloff.
AIG also plans to sell some new shares in the stock offering, which is expected to total $10bn-15bn.
The company’s share price fell 3.5% on the news to $42, as the new share issue would dilute the value of existing shares. But the share price remained above the $30 level at which the Treasury would make a profit on its investment.
“Today’s announcement is a milestone in the government’s long-stated efforts to exit our investments in private companies as soon as practical while protecting taxpayers,” said Treasury spokesman Tim Massad in a statement on the government department’s website.
“When all is said and done, we believe taxpayers will recover every dollar invested in AIG and stand a good chance of making a profit.”
The company received a total bail-out of about $182bn, some of which was controversially used to make good on payments owed by the insolvent insurer to major banks and financial institutions, including Goldman Sachs.
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Source: BBC
