AIG, Treasury Confirm Stock Sale

New York-based American International Group and the U.S. Treasury Department have announced plans to sell 100 million shares and 200 million shares, respectively, of AIG common stock.

With AIG shares currently trading around $30, the sale is expected to net $9 billion while reduce Treasury’s voting stake in the company to 77% from 92%. However, the news cast new doubts on whether the government will be able to recoup all of the $182 billion in bailout funds AIG received during the financial crisis. The stock sale was first plotted in September 2010, when AIG announced a plan to expedite repayment of its debt to the federal government.

One factor complicating the sale is AIG’s recently sagging share price, which has declined steadily this year after cresting at more than $60 during January. The decline in price has been attributed to concerns over catastrophe-driven losses at AIG’s property/casualty business, Chartis, and overall lackluster first-quarter results. Moreover, INN reported in January that company shares were expected to dip as the new shares flooded the market.

AIG notes that it will not receive any of the proceeds from the sale of the shares of AIG common stock by Treasury. The company says it intends to use $550 million of the net proceeds from the offering to fund part of a previously disclosed litigation settlement and to use the balance for general corporate purposes.