AIG to repay $21bn emergency loan ahead of share sale
American International Group (AIG), the troubled giant US insurer, is to repay one of the emergency rescue loans it received during the financial crisis.
It will repay the remaining $21bn outstanding from a $91bn loan from the Federal Reserve Bank of New York.
The move will pave the way for the US Treasury to sell a fifth of the insurer on the stock exchange early next year.
The Treasury currently owns 80% of AIG, although this will rise to some 92% before the planned share selloff.
AIG also plans to sell some new shares in the stock offering, which is expected to total $10bn-15bn.
The company's share price fell 3.5% on the news to $42, as the new share issue would dilute the value of existing shares. But the share price remained above the $30 level at which the Treasury would make a profit on its investment.
"Today's announcement is a milestone in the government's long-stated efforts to exit our investments in private companies as soon as practical while protecting taxpayers," said Treasury spokesman Tim Massad in a statement on the government department's website.
"When all is said and done, we believe taxpayers will recover every dollar invested in AIG and stand a good chance of making a profit."
The company received a total bail-out of about $182bn, some of which was controversially used to make good on payments owed by the insolvent insurer to major banks and financial institutions, including Goldman Sachs.