The U.S. Treasury Department will sell $5 billion in shares of American International Group Incorporated (NYSE: AIG) as it continues to divest its balance sheet of shares in the bailed-out insurance giant, which has agreed to purchase $2 billion of its own shares as part of the stock offering, the company announced Monday.
The Treasury Department priced the almost 164 million shares in the public offering at $30.50 per share, a total value of approximately $5 billion. New York-based AIG has agreed to buy approximately 65.5 million of those shares, a value of roughly $2 billion.
We're continuing to make significant progress exiting our investment in A.I.G. We remain hopeful that taxpayers will ultimately recover every single dollar invested in the company, which is something few would have expected during the depths of the financial crisis, Timothy G. Massad, assistant secretary for financial stability at the Treasury Department, said.
The stock offering is expected to reduce the Treasury Department's ownership of AIG from roughly 70 percent to 63 percent. At the height of the financial crisis, when the government bailed out AIG, the Treasury Department and the Federal Reserve Bank of New York held a combined $182 billion stake in AIG. Once the current sale of AIG shares is realized, remaining government investments in the company will total just $39 billion, or 21 percent of the original.
The sale of AIG shares comes as part of the Treasury Department's continuing efforts to wind down the Troubled Asset Relief Program (TARP). According to the Treasury Department, more than 81 percent, or $338 billion, of the $415 billion funds disbursed for TARP has already been recovered to date through repayments and other income, before including the impact of the current sale of AIG shares.
The Treasury Department sold roughly $6 billion of AIG shares at $29 a share in March, and AIG bought $3 billion, according to The New York Times.
American International Group Incorporated (NYSE: AIG) shares fell $1.89, 5.76 percent, to $30.93 a share mid-morning Monday.
The Treasury Department considers the break-even price of the stock to be $28.73, according to the New York Times.