AIG repays NY Fed, Treasury now holds 92% of common stock
American International Group has fully repaid the revolving line of credit it received from the Federal Reserve Bank of New York. On Friday, the NY Fed reported the company closed its recapitalization agreement and has no obligations outstanding with the central bank. AIG repaid $21 billion of the credit facility Friday and also converted other debt obligations into common shares, which resulted in the Treasury Department owning about 92% of common shares outstanding. It's expected the Treasury will sell those shares and recoup its investment in the company. The Fed said the credit facility wasn't set to expire until September 2013, but AIG has fully repaid all interest and fees. The central bank initially provided AIG with an $85 billion line of credit in September 2008. The amount was restructured and lowered numerous times because some of the company's debt obligations were transferred to the Treasury Department. "Today is a very important day that should be viewed as a testament to the unrelenting dedication of terrific people both in the government and at AIG," said President and Chief Executive Officer Robert Benmosche. "Based on our success over the last two years in stabilizing our businesses, retaining our clients, achieving momentum in sales, restoring relationships with distribution partners, and returning to normal rates of employee turnover, we are confident that we can continue to build long-term value for all of our stakeholders, including U.S. taxpayers, and demonstrate through our actions going forward that we are worthy of investor confidence." The NY Fed said AIG stabilized its results by reducing the risk, scope and complexity of its operations. "Today's closing represents a substantial step toward achieving the Federal Reserve’s dual goals of stabilizing AIG and ensuring its repayment of government assistance," the Fed said. William Dudley, president of the NY Fed, said the repayment "concludes an important effort by the Federal Reserve to stabilize the financial system in order to protect the U.S. economy." Write to Jason Philyaw.