AIG raises enough to pay off NY Fed credit linePosted On: Nov. 1, 2010 12:00 AM CST
NEW YORK (Reuters)-Bailed-out insurer American International Group Inc, raised $27.71 billion cash in 10 days with the initial public offering of its Asian life business AIA Group Ltd. and the sale of its global life unit ALICO, enough to repay a credit facility from the Federal Reserve Bank of New York.
AIG said on Monday it closed the sale of ALICO to MetLife Inc. for $16.2 billion, of which $7.2 billion was cash. That followed the October 22 sale of shares in AIA and the October 29 exercise of the over-allotment option on the sale, generating gross proceeds of $20.51 billion.
AIG said it would use the cash to repay the New York Fed credit facility and make other bailout-related payments to the government.
AIG owed the New York Fed about $20 billion in principal and interest on the credit facility as of last week.
The proceeds from the deals are being put in escrow with the New York Fed until an AIG recapitalization deal, announced in September, closes in the first quarter of 2011.
That deal aims to accelerate AIG's payback of bailouts totaling $182.3 billion, while simplifying the bailout structure by repaying the New York Fed in full and leaving the U.S. Treasury Department with a 92.1% stake in the company.