Treasury ending four years of AIG stock ownership

[Update 1: Aggregate proceeds now available.]

The overall positive return on the Federal Reserve and Treasury’s combined $182 billion commitment to stabilized AIG during the crisis is now $22.7 billion. The aggregate proceeds to Treasury from the common stock offering are projected to total $7.6 billion. 

The Treasury has realized a positive return of $5 billion and the Fed has realized a positive return of $17.7 billion, giving effect to the offering, to date.

The Treasury realized a $4.1 billion positive return on its common stock holdings and $0.9 billion positive return on its perferred stock holdings. 

The Treasury’s final sale of AIG common stock is part of its continual efforts to wind down the Troubled Asset Relief Program. More than 90%, or $380 billion, of the $418 billion funds disbursed for TARP were recovered to date through repayments and other income. 

The Treasury Department launched an unwritten public offering for all of its remaining 234,169,156 shares of American International Group (AIG) stock, ending the four-year ownership of the bailed-out issuer. 

The Treasury will continue to hold warrants to purchase AIG’s common stock that were also issued as a part of the company’s participation in Treasury programs, if the offering is completed.

Bank of America Merrill Lynch (BAC), Deutsche Bank (DB), Goldman Sachs (GS) and JP Morgan (JPM) are retained as joint bookrunners for the offering.

At Monday’s closing prices, the stake would be worth about $7.81 billion.

“The offering will be made under AIG’s shelf registration statement filed with the Securities and Exchange Commission and only by means of a prospectus supplement and accompanying prospectus,” the release stated.

No timeline was outlined for the Treasury’s latest stock offer.

In September, the Treasury completed its offering of 636.9 million shares of AIG stock. It included 153.8 million shares purchased by AIG for $5 billion, equaling the combined amount of repurchases it made in the past two quarters. 

The Treasury received $20.7 billion from the offering, reducing its remaining investment in AIG to 234.2 million shares of common stock, or 15.9% of outstanding shares from 53.4%. 

A month before, the Federal Reserve sold its remaining mortgage bonds bought from AIG as part of its commitment to bail out the firm. 

Those sales and the TARP unwinding by Treasury are expected to generate a return for the original $161 billion in taxpayer money originally committed to bail out AIG, according to SIGTARP 

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