AIG, Treasury plan share sale
By Ben Berkowitz |
May 12, 2011, Thursday
|
Print Edition
Print Edition
AMERICAN International Group and the United States Treasury will sell nearly US$9 billion in AIG stock, they said yesterday, a huge offering but less than half of what had been contemplated earlier this year.
AIG shares fell more than 2 percent in premarket trading on the news, continuing the sharp slide that has knocked more than a third off the company's value in the last four months. At the premarket price, AIG is less than 30 US cents a share from the government's break-even point.
To be sure, when AIG was rescued in September 2008, few expected it would even exist today. The company received US$182 billion in bailouts and managed to restructure while preserving two core businesses.
But the prospective offering of 100 million shares by the firm and 200 million shares by the Treasury has been pressured by the slide in AIG's stock.
A mix of heavy interest from short-sellers betting the shares would fall further, dilution fears for those with long positions and operational questions linked to legacy charges at two AIG units weighed on the shares, driving them from the mid-US$40s range to the upper US$20s.
AIG said last Friday it needed to raise US$3 billion in the offering, which would imply a price of around US$30 a share. But one investor said yesterday the offering was more likely to price at a discount to where the shares are now, a view shared by most sources familiar with the process.
If the stock priced at a 5 percent discount to Tuesday's close, as has been suggested is possible, the offering would be worth US$8.44 billion.
The Treasury also has the option to sell an extra 45 million shares to cover any over-allotments, which would raise the value of the sale to more than US$10 billion.
Assuming the Treasury sells only the 200 million shares, the government's stake in AIG would fall to 77 percent from the current 92 percent.
AIG shares fell more than 2 percent in premarket trading on the news, continuing the sharp slide that has knocked more than a third off the company's value in the last four months. At the premarket price, AIG is less than 30 US cents a share from the government's break-even point.
To be sure, when AIG was rescued in September 2008, few expected it would even exist today. The company received US$182 billion in bailouts and managed to restructure while preserving two core businesses.
But the prospective offering of 100 million shares by the firm and 200 million shares by the Treasury has been pressured by the slide in AIG's stock.
A mix of heavy interest from short-sellers betting the shares would fall further, dilution fears for those with long positions and operational questions linked to legacy charges at two AIG units weighed on the shares, driving them from the mid-US$40s range to the upper US$20s.
AIG said last Friday it needed to raise US$3 billion in the offering, which would imply a price of around US$30 a share. But one investor said yesterday the offering was more likely to price at a discount to where the shares are now, a view shared by most sources familiar with the process.
If the stock priced at a 5 percent discount to Tuesday's close, as has been suggested is possible, the offering would be worth US$8.44 billion.
The Treasury also has the option to sell an extra 45 million shares to cover any over-allotments, which would raise the value of the sale to more than US$10 billion.
Assuming the Treasury sells only the 200 million shares, the government's stake in AIG would fall to 77 percent from the current 92 percent.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
