8-KMaterial Agreements

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Material Agreement (Oct 30, 2008)

Filed October 30, 2008For Securities:AIG

Summary

This Form 8-K filing from American International Group (AIG) on October 30, 2008, announces a significant move to address liquidity concerns amidst the ongoing financial crisis. Four AIG affiliates applied to participate in the Federal Reserve Bank of New York's Commercial Paper Funding Facility (CPFF), a government-backed program designed to support the commercial paper market. This participation allows AIG to potentially issue approximately $20.9 billion in commercial paper across its affiliates, providing a crucial source of funding. The primary purpose of issuing this commercial paper through the CPFF is to refinance existing AIG commercial paper as it matures, cover other working capital requirements, and reduce outstanding borrowings under AIG's substantial $85 billion credit facility with the Federal Reserve. This action signals AIG's proactive steps to manage its short-term debt obligations and stabilize its financial position during a period of intense market stress.

Key Highlights

  • 1AIG affiliates (AIG Funding, Inc., International Lease Finance Corporation, Curzon Funding LLC, and Nightingale Finance LLC) applied to participate in the Federal Reserve Bank of New York's Commercial Paper Funding Facility (CPFF).
  • 2The aggregate potential issuance amount under the CPFF by these AIG affiliates is approximately $20.9 billion ($6.9B + $5.7B + $7.2B + $1.1B).
  • 3Participation in the CPFF is on the same terms and conditions as other companies joining the facility.
  • 4Proceeds from commercial paper issued under the CPFF will be used to refinance maturing commercial paper.
  • 5Funds will also be used to meet other working capital needs of AIG.
  • 6The issuance will facilitate voluntary prepayments under AIG's $85 billion credit facility with the Federal Reserve Bank of New York.
  • 7This filing underscores AIG's efforts to secure short-term funding and manage liquidity during a critical financial period.

Frequently Asked Questions

The Commercial Paper Funding Facility (CPFF) was a liquidity facility established by the Federal Reserve Bank of New York to provide funding to U.S. issuers of commercial paper. It aimed to improve the functioning of the commercial paper market and prevent disruptions to credit markets during times of financial stress.

AIG is participating in the CPFF to access funding to refinance its maturing commercial paper, meet its working capital needs, and reduce its reliance on its $85 billion credit facility with the Federal Reserve. This is a strategic move to manage its short-term debt obligations and ensure liquidity during a challenging financial environment.

Through four of its affiliates, AIG has the potential to issue up to approximately $20.9 billion in commercial paper under the CPFF. The individual amounts are $6.9 billion for AIG Funding, Inc., $5.7 billion for International Lease Finance Corporation, $7.2 billion for Curzon Funding LLC, and $1.1 billion for Nightingale Finance LLC.

This filing indicates AIG is taking proactive measures to secure necessary short-term funding. By utilizing the CPFF, AIG aims to stabilize its liquidity position and manage its debt. However, it's important for investors to note this is a response to existing financial pressures and part of broader efforts to manage significant financial challenges AIG was facing at that time.