Reported by: Eric CRWE Newswire Middle East correspondent
It is expected the Treasury Department will opt for a conversion of $49 billion of AIG preferred shares into common stock which will result in a reduction of more than 90% of government holding in American International group as compared to earlier expectation of 79.8%.
According to Treasury department’s current plan once preferred shares converted into common stock they will be sold to private investors which would eventually earn more profit for the US government.
The US government bailed out AIG by almost $100 billion in 2008 due to financial turmoil and saved AIG from possible bankruptcy. Earlier American International Group has also tried to sell its international Alico and AIA units to repay the taxpayer’s money.
AIG has decided to first repay the outstanding loan of the Federal Reserve before going into transaction of preferred stocks held by the Treasury.
Some experts believe that proposed exit plan would take years in implementation as they largely depend on market and economic conditions. The need for AIG is to convince its investors that it can consistently generate profit from its core business of insurance.
American International Group Inc’s (NYSE:AIG) share price closed at $36.13 on September 14th, 2010 with total volume of 3.09 million shares being traded for the day.
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