AIG sells US$6b of AIA stock to repay debt to US
Source: Bloomberg News |
March 6, 2012, Tuesday
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Print Edition
Print Edition
AMERICAN International Group Inc, which got a US$182.3 billion bailout after the collapse of Lehman Brothers Holdings Inc, is selling US$6 billion of AIA Group Ltd shares to pay back the US government.
The New York-based insurer, majority owned by the US, is offering about 1.7 billion AIA shares at HK$27.15 to HK$27.50 (US$3.50 to US$3.54) a share to institutional investors who weren't identified, according to a sales document obtained by Bloomberg News. AIG will hold about 19 percent of AIA after the stock sale.
AIG was rescued in September 2008 after the collapse of the subprime housing market and Lehman triggered credit rating downgrades of the insurer that covered more than US$441 billion of fixed-income investments. The AIA share sale also helps remove some investor concerns a bulk sale of AIG's stake may damp the stock of the Asian insurer.
"AIG needs the money to repay the government," said Andrew Sullivan, principal sales trader at Piper Jaffray Asia Securities Ltd in Hong Kong. "For holders of the Hong Kong-listed company, it starts to remove a known overhang so it's a long-term positive, but short term it hurts."
AIG sold about two-thirds of the Hong Kong-based life insurer in a 2010 initial public offering. Its stake before the latest share sale has a market value of about US$15 billion, which is part of the collateral backing obligations to the Treasury. Chief Executive Officer Robert Benmosche said last month that AIG may wait to sell its AIA stake and use the money to reduce the government's 77 percent ownership.
The New York-based insurer, majority owned by the US, is offering about 1.7 billion AIA shares at HK$27.15 to HK$27.50 (US$3.50 to US$3.54) a share to institutional investors who weren't identified, according to a sales document obtained by Bloomberg News. AIG will hold about 19 percent of AIA after the stock sale.
AIG was rescued in September 2008 after the collapse of the subprime housing market and Lehman triggered credit rating downgrades of the insurer that covered more than US$441 billion of fixed-income investments. The AIA share sale also helps remove some investor concerns a bulk sale of AIG's stake may damp the stock of the Asian insurer.
"AIG needs the money to repay the government," said Andrew Sullivan, principal sales trader at Piper Jaffray Asia Securities Ltd in Hong Kong. "For holders of the Hong Kong-listed company, it starts to remove a known overhang so it's a long-term positive, but short term it hurts."
AIG sold about two-thirds of the Hong Kong-based life insurer in a 2010 initial public offering. Its stake before the latest share sale has a market value of about US$15 billion, which is part of the collateral backing obligations to the Treasury. Chief Executive Officer Robert Benmosche said last month that AIG may wait to sell its AIA stake and use the money to reduce the government's 77 percent ownership.
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