Government, AIG to sell shares
NEW YORK — Bailed-out American International Group and the government are offering to sell 300 million AIG shares to the public — a big step by the government toward disentangling itself from the insurer. AIG got $182 billion in 2008, the biggest bailout of the financial crisis.
AIG and the government did not specify a price for the shares. But 300 million shares were worth about $8.89 billion at Tuesday’s closing price of $29.62.
AIG shares have dropped more than 40 percent since hitting a high of $52.67 on Jan. 7. Last week, the company reported a first-quarter loss, weighed down by the repayment of bailout aid and losses from Japan’s earthquake and tsunami.
In March, AIG repaid the Treasury Department nearly $7 billion, trimming its outstanding balance to just under $60 billion. Treasury owns about 92 percent of AIG. The government expects to sell its shares over the next two years. Treasury officials have said they expect to recoup the full bailout amount.
The “break-even’’ stock price at which taxpayers would fully recover their investment is considered to be $27 to $28.
AIG is offering 100 million shares for sale and Treasury is offering 200 million. Treasury will give the underwriters an option to buy 45 million more.
The Government Accountability Office says the final cost of the rescue will depend on the strength of AIG’s businesses and its share price.