WASHINGTON – Today, the U.S. Department of the Treasury announced that the previously reported offering by American International Group (AIG) of MetLife (MET) equity securities has priced. A total of 146.8 million shares of MET common stock were sold at an offering price of $43.25 per share, resulting in $6.3 billion of expected gross proceeds. Proceeds from the offering will be used to pay back the U.S. taxpayers investment in AIG through the redemption of an equal portion of Treasury’s preferred equity interests in that company, which currently stand at $18.2 billion.
“This is the next chapter in AIG’s remarkable turnaround,” said Acting Assistant Secretary for Financial Stability Tim Massad. “We are optimistic about the prospects that taxpayers will recover every dollar invested in AIG – something that many thought would be impossible when these investments were first made.”
Additionally, $3 billion of MetLife equity units were sold for $3.3 billion. Upon settlement, the proceeds from the sale of the equity units will remain in an indemnity escrow to secure obligations that may be owed to MetLife, as previously agreed to under the terms of the ALICO sale. These proceeds will be released according to agreed-upon minimum holding periods over the next two years and used to pay down Treasury’s preferred equity interests.
Background on Treasury Investment in AIG
After the completion of AIG’s recapitalization transaction on January 14, Treasury received 1.655 billion shares of AIG common stock (approximately 92 percent of AIG’s outstanding common stock) and $20.4 billion in preferred equity interests in AIG. Treasury made a total cash investment in AIG of approximately $68 billion through the Troubled Asset Relief Program (TARP).
AIG’s February 1 sale of its subsidiaries AIG Star Life Insurance Co., Ltd. and AIG Edison Life Insurance Company delivered $2.2 billion in total proceeds to Treasury, which reduced the total outstanding amount of Treasury’s preferred equity interest in AIG from $20.4 billion to the current amount of $18.2 billion. When Treasury receives the proceeds from the sale of MET common stock, AIG will have paid down more than 40 percent of Treasury’s original $20.4 billion preferred equity interest in AIG since the company completed its recapitalization transaction on January 14.
For additional background:
Treasury Announces Completion of the American International Group Recapitalization Transaction, January 14, 2011
Treasury Department Statement on AIG’s Transaction Agreement, December 8, 2010: