Government steps in again, bails out AIG with $85B
09-23-2008, 02:27 PM
#22
Gets Weekends Off
Joined APC: Feb 2008
Posts: 2,322
If these shareholders put this together, which I believe they will, the stock price will jump big. People like Broad and Greenberg have too much money on the line to let the Govt come in for an 80% ownership stake.
Reuters
Investor group working with AIG to thwart Fed takeover
Tuesday September 23, 6:01 pm ET
By Lilla Zuill
NEW YORK (Reuters) - American International Group Inc (NYSE:AIG - News) is cooperating with a large investor group working to thwart a government takeover, a lawyer for investors said.
Representatives of the investor group will be briefed by the company on its financial position as early as Tuesday afternoon, said Mickey Kantor, of law firm Mayer Brown.
CEO Edward Liddy and others at AIG "could not be more cooperative," Kantor added.
AIG declined to comment.
The investor group represents more than a third of all AIG stockholders, including pension funds, and current and retired employees, Kantor said.
"We think it is in the best interest of the company to put some plan in place," he added.
Former CEO Maurice "Hank" Greenberg, AIG's largest individual shareholder, has thrown his support behind the investor group, said a spokesman.
Investors have much at stake. AIG's stock has fallen more than 90 percent over the past year, and will have little chance of recovery if the federal government -- which stepped in to keep the insurer from collapse with an $85 billion credit facility -- exercises warrants for up to 80 percent ownership.
AIG is to repay the government loan with proceeds from asset sales.
On paper, AIG has a net saleable value of $82 billion -- equal to more than $30 a share -- Credit Suisse said in a research note on Tuesday.
The net figure assumes AIG will pay in excess of $30 billion to rid its balance sheet of thorny liabilities, including credit default swaps on mortgage-linked derivatives that triggered $18 billion in losses over the past three quarters.
Shares of AIG closed up 6 percent at $5 Tuesday on the New York Stock Exchange.
Still, analyst Tom Gallagher said investors face hurdles in being able to outmaneuver the government taking majority ownership.
"Some hurdles to getting this done would include raising that much cash in a short amount of time ... and uncertainty over whether there will be a shareholder vote regarding approval of the terms with government."
The New York Insurance Department -- appointed to oversee AIG's insurance operations in the wake of the federal bailout -- would evaluate any proposal presented, said spokesman David Neustadt.
BROAD & CO
Eli Broad, a major AIG shareholder and former director, flew into New York with Kantor from Washington D.C. on Monday to meet with other investors.
"There was a unanimity of opinion," said Kantor, a former U.S. Secretary of Commerce in the Clinton administration, of the tone set in the group's first formal meeting.
Broad has spoken with Liddy by telephone, Kantor said.
In June, Broad, in concert with fund managers Shelby Davis of Davis Selected Advisors LP and Bill Miller of Legg Mason Inc (NYSE:LM - News), were critical of management's handling of massive mortgage losses, leading to then-chief executive Martin Sullivan's ouster.
The internal briefing on the company's financial position, and possible assets for sale, will include several people from AIG, but not new CEO Liddy, Kantor said.
Liddy was in Washington D.C. on Tuesday, along with representatives of the New York Insurance Department, briefing insurance regulators from across the nation on AIG's situation.
The former Allstate Corp (NYSE:ALL - News) chairman took over AIG's helm last week, replacing former Citigroup executive Robert Willumstad, who had been CEO since June 15.
Liddy has said he expects to unveil what parts of AIG are up for sale within the next week to 10 days.
AIG on Tuesday said it will halt its common stock dividend in a bid to conserve capital.
Reuters
Investor group working with AIG to thwart Fed takeover
Tuesday September 23, 6:01 pm ET
By Lilla Zuill
NEW YORK (Reuters) - American International Group Inc (NYSE:AIG - News) is cooperating with a large investor group working to thwart a government takeover, a lawyer for investors said.
Representatives of the investor group will be briefed by the company on its financial position as early as Tuesday afternoon, said Mickey Kantor, of law firm Mayer Brown.
CEO Edward Liddy and others at AIG "could not be more cooperative," Kantor added.
AIG declined to comment.
The investor group represents more than a third of all AIG stockholders, including pension funds, and current and retired employees, Kantor said.
"We think it is in the best interest of the company to put some plan in place," he added.
Former CEO Maurice "Hank" Greenberg, AIG's largest individual shareholder, has thrown his support behind the investor group, said a spokesman.
Investors have much at stake. AIG's stock has fallen more than 90 percent over the past year, and will have little chance of recovery if the federal government -- which stepped in to keep the insurer from collapse with an $85 billion credit facility -- exercises warrants for up to 80 percent ownership.
AIG is to repay the government loan with proceeds from asset sales.
On paper, AIG has a net saleable value of $82 billion -- equal to more than $30 a share -- Credit Suisse said in a research note on Tuesday.
The net figure assumes AIG will pay in excess of $30 billion to rid its balance sheet of thorny liabilities, including credit default swaps on mortgage-linked derivatives that triggered $18 billion in losses over the past three quarters.
Shares of AIG closed up 6 percent at $5 Tuesday on the New York Stock Exchange.
Still, analyst Tom Gallagher said investors face hurdles in being able to outmaneuver the government taking majority ownership.
"Some hurdles to getting this done would include raising that much cash in a short amount of time ... and uncertainty over whether there will be a shareholder vote regarding approval of the terms with government."
The New York Insurance Department -- appointed to oversee AIG's insurance operations in the wake of the federal bailout -- would evaluate any proposal presented, said spokesman David Neustadt.
BROAD & CO
Eli Broad, a major AIG shareholder and former director, flew into New York with Kantor from Washington D.C. on Monday to meet with other investors.
"There was a unanimity of opinion," said Kantor, a former U.S. Secretary of Commerce in the Clinton administration, of the tone set in the group's first formal meeting.
Broad has spoken with Liddy by telephone, Kantor said.
In June, Broad, in concert with fund managers Shelby Davis of Davis Selected Advisors LP and Bill Miller of Legg Mason Inc (NYSE:LM - News), were critical of management's handling of massive mortgage losses, leading to then-chief executive Martin Sullivan's ouster.
The internal briefing on the company's financial position, and possible assets for sale, will include several people from AIG, but not new CEO Liddy, Kantor said.
Liddy was in Washington D.C. on Tuesday, along with representatives of the New York Insurance Department, briefing insurance regulators from across the nation on AIG's situation.
The former Allstate Corp (NYSE:ALL - News) chairman took over AIG's helm last week, replacing former Citigroup executive Robert Willumstad, who had been CEO since June 15.
Liddy has said he expects to unveil what parts of AIG are up for sale within the next week to 10 days.
AIG on Tuesday said it will halt its common stock dividend in a bid to conserve capital.
Last edited by capncrunch; 09-23-2008 at 02:37 PM.
