8-KOther EventsExhibits & Filings

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Corporate Update (Aug 20, 2012)

Filed August 20, 2012For Securities:AIG

Summary

American International Group, Inc. (AIG) filed this Form 8-K on August 20, 2012, to announce its intention to launch an offering of Subordinated Notes due 2015. This offering is significant as it will designate these new notes as "covered debt" under AIG's existing Replacement Capital Covenants (RCCs). Crucially, AIG also intends to amend these RCCs to remove covenants that previously restricted its ability to repay, redeem, or purchase its outstanding Junior Subordinated Debentures. These restrictions were tied to the equity credit rating assigned to the debentures and are no longer deemed necessary by AIG. By purchasing the new Subordinated Notes, investors will be deemed to irrevocably consent to these amendments and waive any rights to enforce the original covenants in the RCCs.

Key Highlights

  • 1AIG is launching an offering of Subordinated Notes due 2015.
  • 2The new notes will become "covered debt" under existing Replacement Capital Covenants (RCCs).
  • 3AIG plans to amend its RCCs to remove covenants restricting repayment/redemption of Junior Subordinated Debentures.
  • 4These amendments are possible because the restrictions are no longer required for maintaining equity credit ratings.
  • 5Purchasers of the new notes will irrevocably consent to the RCC amendments.
  • 6Investors purchasing the notes are waiving their right to enforce prior covenants within the RCCs.
  • 7The filing also includes the form of amendment to the Replacement Capital Covenants as an exhibit.

Frequently Asked Questions

The primary purpose is to inform investors about AIG's intention to offer new Subordinated Notes due 2015 and to detail the associated changes to its Replacement Capital Covenants (RCCs) that will occur upon the issuance of these notes.

RCCs are agreements that were put in place to support the equity credit ratings of AIG's Junior Subordinated Debentures. They contained restrictions on AIG's ability to deal with these debentures unless certain replacement capital was issued. AIG is amending them because these restrictions are no longer necessary to maintain the desired equity credit ratings for the debentures.

By purchasing the new Subordinated Notes, investors will become holders of "covered debt" under the RCCs. They will be considered to have irrevocably consented to the amendments of the RCCs and will waive their right to enforce any of the original covenants that existed in those agreements prior to the amendments.

The amendment to the RCCs will allow AIG more flexibility in managing its existing Junior Subordinated Debentures. Specifically, it removes restrictions that previously would have required AIG to issue replacement capital before it could repay, redeem, or purchase these debentures. This implies AIG may have future plans to retire or restructure this debt.