American International Group, Inc. (NYSE: AIG) filed a Form 424B7 Prospectus Supplement on March 9 in connection with U.S. Treasury efforts to exit its investment in AIG and wind down the Troubled Asset Relief Program (SEC file no. 333-160645). The underwritten resale of $6B worth of the $41.8B common stock held by the government, $3B of which is to be repurchased by AIG at the initial price to the public, will bring Treasury's stake in the insurer down from 77 to approximately 70 percent.
The supplement notes that Treasury and AIG reached agreement on March 7 that provides for the repayment of the government’s remaining $8.5B preferred equity investment in the AIG-owned entity AIA Aurora LLC (AIA SPV) – a special purpose vehicle that holds ordinary shares in AIA Group Limited (AIA). The AIA SPV was created in December 2009 in exchange for a reduction in the debt that AIG owed the Federal Reserve Bank of New York at the time. The Agreement to Amend Master Transaction Agreement is filed as Exhibit 10.1 to the Form 8-K filed by AIG on March 8 (file no. 001-08787).
AIG, AIA SPV, Treasury and FRBNY are parties to a Master Transaction Agreement dated 12/8/2010 regarding a series of integrated transactions to recapitalize AIG, including the repayment of all amounts owing under a 2008 Credit Agreement with FRBNY. The master agreement (Exhibit 2.l to the AIG Form 8-K filed 12/8/2010) indicates that Davis Polk & Wardwell provides counsel to Treasury and FRBNY, and that Sullivan & Cromwell is counsel to AIG and AIA SPV.
