Treasury to provide nearly $30 billion to AIG!
LONDON, England - April 20, 2009 - American International Group on Monday said it's reached agreement with the U.S. Treasury to swap classes of preferred shares, a deal that could give it access to nearly $30 billion in funds in return for limitations on lobbying and compensation.
AIG, in a Securities and Exchange Commission filing, said that it's reached a deal with the U.S. Treasury to swap different classes of preferred stock. The move will restrict AIG's ability to repurchase capital stock and requires the insurer to continue to maintain policies limiting corporate expenses, lobbying activities and executive compensation.
The Treasury Department has committed for five years to provide up to $29.84 billion in immediately available funds so long as AIG doesn't file for Chapter 11 bankruptcy protection and the U.S. Treasury holds more than 50% of the voting power.
Terms of the help were first announced in early March.
AIG, which reported losses of more than $61 billion for 2008, already has received more than $160 billion in government funds to avert a bankruptcy. The insurer was rescued over fears of what a potential bankruptcy would mean for the broader financial-services industry as well as for individual policyholders.
In another filing, AIG said that its credit pact with the New York Federal Reserve Bank was amended. Among other changes, the minimum 3.5% Libor rate was removed.
Last week AIG announced the sale of its U.S. car-insurance group to Zurich Financial for $1.5 billion in cash and $400 million of notes as it continued to sell off businesses.