8-KMaterial Agreements

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Material Agreement (Mar 8, 2012)

Filed March 8, 2012For Securities:AIG

Summary

This Form 8-K filing by American International Group, Inc. (AIG) on March 8, 2012, announces a significant amendment to existing agreements with the U.S. Department of the Treasury. The primary focus of this amendment is the disposition of proceeds from the sale of AIG's remaining shares in AIA Group Limited ("AIA"). Specifically, AIG's special purpose vehicle (SPV) holding AIA shares will be allowed to retain net proceeds exceeding approximately $5.58 billion from the AIA sale. Furthermore, this amendment involves the release of certain collateral previously pledged to the Treasury, including interests in International Lease Finance Corporation and the remaining AIA shares held by the AIA SPV. These releases are contingent on specific uses of the AIA sale proceeds and other asset dispositions to partially repay AIG's intercompany loans and reduce the Treasury's liquidation preference. This filing signifies a step towards AIG's deleveraging and a clearer path for the repatriation of sale proceeds, while also detailing a redemption of the Treasury's preferred return rights and a commitment to repay the remaining liquidation preference by May 2013.

Key Highlights

  • 1AIG has amended agreements with the U.S. Department of the Treasury concerning proceeds from the sale of AIA Group Limited (AIA) shares.
  • 2The AIA SPV can retain net proceeds from the AIA sale that exceed approximately $5.58 billion.
  • 3Collateral held by the Treasury, including stakes in ILFC and remaining AIA shares, will be released.
  • 4The release of collateral is conditional on the proceeds from the AIA sale and other AIG assets being used to repay intercompany loans and reduce the Treasury's liquidation preference.
  • 5AIG will redeem the Treasury's preferred participating return rights for approximately $127 million.
  • 6AIG is committed to repaying the Treasury's remaining liquidation preference in the AIA SPV by May 8, 2013.

Frequently Asked Questions

The primary purpose of the Amendment is to modify the terms of AIG's agreements with the U.S. Department of the Treasury concerning the proceeds from the sale of AIG's remaining shares in AIA Group Limited (AIA). It allows AIG to benefit from proceeds exceeding a certain threshold and facilitates the release of collateral.

The AIA SPV, which holds AIG's AIA shares, will be permitted to retain and distribute to AIG any net proceeds from the AIA sale that are in excess of approximately $5.58 billion. A portion of these proceeds will be used to partially pay down the Treasury's liquidation preference.

The collateral being released includes equity interests in International Lease Finance Corporation (ILFC), the remaining ordinary shares of AIA held by the AIA SPV, and common equity interests in the AIA SPV. The release is subject to conditions, including the use of net proceeds from the AIA sale and other AIG assets to repay intercompany loans and reduce the Treasury's liquidation preference.

AIG has agreed to redeem the Treasury's preferred participating return rights for approximately $127 million and has committed to repay the Treasury's remaining liquidation preference in the AIA SPV by May 8, 2013.