8-KMaterial AgreementsExhibits & Filings

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Material Agreement (Mar 5, 2010)

Filed March 5, 2010For Securities:AIG

Summary

On March 1, 2010, American International Group (AIG) announced a definitive agreement to sell its subsidiary, AIA Group Limited (AIA), to Prudential plc's subsidiary, Petrohue (UK) Investments Limited, for a total of $35.5 billion. This transaction represents a significant divestiture for AIG as it continues to restructure and manage its financial position. The deal comprises a mix of cash, ordinary shares in Petrohue, mandatory convertible securities, and preferred stock, providing AIG with substantial liquidity and equity in the acquiring entity. The sale is subject to numerous closing conditions, including regulatory approvals, Prudential shareholder approval, and the successful completion of a scheme of arrangement to establish Petrohue as Prudential's new holding company. The transaction is expected to close by March 1, 2011, with provisions for monthly payments if the closing is delayed beyond August 31, 2010. Termination clauses and a termination fee of £153 million are in place, contingent on specific events such as the withdrawal of board recommendations or failure to obtain approvals. This divestiture is a crucial step for AIG in deleveraging and focusing on its core businesses.

Key Highlights

  • 1AIG has entered into a definitive agreement to sell its subsidiary, AIA Group Limited, for $35.5 billion.
  • 2The buyer is Petrohue (UK) Investments Limited, a subsidiary of Prudential plc, with Prudential plc providing a guarantee.
  • 3The total consideration includes $25 billion in cash, $5.5 billion in Petrohue ordinary shares, $3 billion in mandatory convertible securities, and $2 billion in Prudential preferred stock.
  • 4The transaction is contingent upon several conditions, including Prudential shareholder approval, regulatory and antitrust clearances, and the effectiveness of a scheme of arrangement.
  • 5A Long Stop Date for closing is set for March 1, 2011, with potential extensions under limited circumstances.
  • 6If the closing is delayed beyond August 31, 2010, Petrohue will pay AIG an additional monthly consideration.
  • 7A termination fee of £153 million is payable by Petrohue under specific circumstances, such as failure to obtain approvals or withdrawal of Prudential's board recommendation.

Frequently Asked Questions

This 8-K filing announces AIG's entry into a material definitive agreement for the sale of its subsidiary, AIA Group Limited, to Prudential plc's subsidiary, Petrohue (UK) Investments Limited, for $35.5 billion.

The sale price is composed of $25 billion in cash, $5.5 billion in face value of ordinary shares in Petrohue, $3 billion in face value of mandatory convertible securities of Petrohue, and $2 billion in face value of preferred stock of Prudential (or Petrohue).

Key conditions include: Prudential shareholders passing requisite resolutions, obtaining necessary regulatory and antitrust approvals, the effectiveness of a scheme of arrangement for Petrohue to become Prudential's new holding company, and the listing of securities on the London Stock Exchange.

If the closing has not occurred by August 31, 2010, Petrohue has agreed to pay AIG an additional amount of consideration equal to 5/1200ths of the outstanding cash consideration per month from September 1, 2010, until the closing date.