Aid to AIG Restructured

The Treasury Department and Federal Reserve Board have restructured the government's assistance to American International Group, Inc. (AIG) in order to stabilize this systemically important company in a manner that best protects the U.S. taxpayer. The restructuring is designed to bolster AIG's capital and liquidity to help facilitate the orderly completion of the company's global divestiture program. In announcing the restructuring, the Treasury stated that “public ownership of financial institutions is not a policy goal and, to the extent public ownership is an outcome of Treasury actions, as it has been with AIG, it will work to replace government resources with those from the private sector to create a more focused, restructured and viable economic entity as rapidly as possible. This restructuring is aimed at accelerating this process.”

The Treasury will exchange its existing $40 billion cumulative perpetual preferred shares for new preferred shares with revised terms that more closely resemble common equity and thus improve the quality of AIG's equity and its financial leverage. Also, the Treasury will create a new equity capital facility, which allows AIG to draw down up to $30 billion as needed over time in exchange for non-cumulative preferred stock to the U.S. Treasury.

http://www.ustreas.gov/press/releases/tg44.htm