8-KOther Events

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Corporate Update (Jan 12, 2011)

Filed January 12, 2011For Securities:AIG

Summary

This Form 8-K filing from American International Group, Inc. (AIG) on January 12, 2011, announces that a key condition has been met for the previously announced dividend of warrants to purchase AIG common stock. The condition was that AIG, the U.S. Treasury, the Federal Reserve Bank of New York (FRBNY), and the AIG Credit Facility Trust all expected the company's recapitalization plan to close on January 14, 2011. With this condition satisfied, AIG will proceed with distributing these warrants on January 19, 2011. The recapitalization, a crucial part of AIG's broader restructuring efforts announced in September 2010, involves using proceeds from the IPO of AIA Group Limited and the sale of American Life Insurance Company to repay approximately $21 billion to the FRBNY. This repayment will lead to the termination of the FRBNY credit facility and is expected to result in a charge of approximately $3.6 billion in the first quarter of 2011 related to a prepaid commitment fee. While the condition for the warrant dividend is met, the overall recapitalization closing is still subject to final conditions.

Key Highlights

  • 1AIG announced that the condition for its dividend of warrants to purchase common stock has been satisfied.
  • 2The warrants will be distributed on January 19, 2011.
  • 3This warrant dividend is part of a larger recapitalization plan announced on September 30, 2010.
  • 4The condition met was that AIG and key government entities expected the recapitalization to close on January 14, 2011.
  • 5The recapitalization involves repaying approximately $21 billion to the FRBNY using proceeds from the AIA Group IPO and the sale of American Life Insurance Company.
  • 6Repaying the FRBNY credit facility is expected to result in a $3.6 billion charge in Q1 2011.
  • 7The overall recapitalization closing is still subject to further conditions.

Frequently Asked Questions

The primary purpose of this Form 8-K is to announce that a necessary condition has been met for AIG to distribute warrants to its shareholders. This distribution is a step within a larger recapitalization plan designed to restructure the company.

AIG will proceed with the distribution of the warrants on January 19, 2011.

The recapitalization is a significant part of AIG's restructuring. It involves using proceeds from the sale of stakes in AIA Group Limited and American Life Insurance Company to repay approximately $21 billion to the Federal Reserve Bank of New York, thus terminating that credit facility. This process is expected to result in a $3.6 billion charge in the first quarter of 2011 due to a prepaid commitment fee.

While the condition for the warrant dividend related to the expected closing of the recapitalization on January 14, 2011, has been satisfied, the recapitalization itself remains subject to closing conditions. There is no absolute assurance that the recapitalization will indeed close on that date.