Treasury prices offering of AIG stock

The Treasury Department will sell 206 million shares of American International Group stock at $29 a share.

The government expects to recoup another $6 billion from this sale. The monoline insurer agreed to buy back 103 million of the offered shares.

During the height of the financial crisis, the Treasury along with the Federal Reserve Bank of New York pledged up to $182 billion to acquire stock and toxic assets as part of the AIG bailout.

AIG also plans to repay $8.5 billion in preferred equity the government held in AIA Aurora, a special purpose vehicle owned by AIG.

The Treasury will hold 1.2 billion shares or roughly 70% of the company AIG after the sale Thursday.

The NY Fed finished selling assets through Maiden Lane II and continues to hold a $9.3 billion loan to AIG through Maiden Lane III, both facilities formed to buy securities and default swaps guaranteed or once held by AIG.

Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, tweeted Wednesday night, “If less than $43.53 per share, it’s a TARP loss.”

The government held $47.5 billion in roughly 1.6 billion shares using both TARP and non-TARP dollars as part of the AIG bailout. Dividing the dollar amount by the entire government’s holdings held before the sale Thursday, the Treasury claims the break even price on AIG stock was $28.73 per share.

More than 77% of the $414 billion disbursed through TARP has been recovered, according to the Treasury.

“We’re continuing to move forward to wind down TARP and exit our stakes in private companies as soon as practicable,” said Assistant Secretary for Financial Stability Tim Massad. “Today is another important step in our efforts to recover the taxpayer’s investment in AIG.”


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