8-KOther EventsExhibits & Filings

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Corporate Update (May 22, 2008)

Filed May 22, 2008For Securities:AIG

Summary

American International Group, Inc. (AIG) announced on May 22, 2008, the successful closing of the sale of two series of junior subordinated debentures: 750,000,000 of 8.000% Series A-7 Junior Subordinated Debentures and 900,000,000 of 8.625% Series A-8 Junior Subordinated Debentures. These offerings were conducted under Rule 144A and Regulation S, indicating a placement to qualified institutional buyers and/or non-U.S. persons. In conjunction with these debt issuances, AIG entered into Replacement Capital Covenants (RCCs). These covenants are designed to protect holders of AIG's 6.25% Notes due 2036. Specifically, AIG and its subsidiaries are restricted from repaying, redeeming, or purchasing the newly issued Series A-7 and Series A-8 Junior Subordinated Debentures before May 22, 2048, unless specific conditions are met, primarily related to the receipt of qualifying proceeds from the sale of other replacement capital securities. This move aims to ensure the stability and long-term debt structure for certain existing noteholders.

Key Highlights

  • 1AIG closed the sale of $750 million of 8.000% Series A-7 Junior Subordinated Debentures.
  • 2AIG closed the sale of $900 million of 8.625% Series A-8 Junior Subordinated Debentures.
  • 3The debentures were offered pursuant to Rule 144A and Regulation S.
  • 4AIG entered into Replacement Capital Covenants (RCCs) in connection with the debenture sales.
  • 5The RCCs restrict AIG from repaying, redeeming, or purchasing the new debentures prior to May 22, 2048.
  • 6These restrictions are in place for the benefit of holders of AIG's 6.25% Notes due 2036.
  • 7Repayments or redemptions of the new debentures before 2048 are contingent upon AIG receiving qualifying proceeds from the sale of replacement capital securities.

Frequently Asked Questions

AIG issued a total of $1.65 billion in junior subordinated debentures, comprised of $750 million of Series A-7 and $900 million of Series A-8.

The RCCs are intended to protect the interests of holders of AIG's 6.25% Notes due 2036 by preventing the premature redemption or repurchase of the newly issued junior subordinated debentures, thus maintaining a certain capital structure and payment priority.

The RCCs impose a significant restriction on AIG's ability to manage its debt obligations related to the Series A-7 and Series A-8 debentures for a period of up to 40 years. AIG cannot repay, redeem, or purchase these securities before May 22, 2048, unless it generates specific 'replacement capital'.

The primary beneficiaries are the holders of AIG's 6.25% Notes due 2036. The covenants ensure that AIG cannot take actions that might negatively impact the seniority or payment security of these existing noteholders through early retirement of newer subordinated debt.