8-KOther EventsExhibits & Filings

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Corporate Update (Aug 23, 2012)

Filed August 23, 2012For Securities:AIG

Summary

This 8-K filing by AMERICAN INTERNATIONAL GROUP, INC. (AIG) on August 23, 2012, announces the successful closing of a $250 million offering of 2.375% Subordinated Notes due 2015. This issuance is significant as it impacts AIG's existing replacement capital covenants (RCCs). The new notes are designated as "covered debt" under these covenants, replacing the previously designated 6.25% Notes due 2036 in this capacity. The filing also details amendments to AIG's original RCCs, prompted by the issuance of these new notes. Specifically, covenants that restricted AIG's ability to repay, redeem, or purchase certain junior subordinated debentures have been removed. These amendments are deemed no longer necessary for maintaining the equity credit assigned by rating agencies to those junior subordinated debentures. Additionally, AIG has entered into new RCCs (New RCCs) for new series of junior subordinated debentures, introducing new restrictions on repaying, redeeming, or purchasing these specific debentures unless certain equity-like cash proceeds are received.

Key Highlights

  • 1AIG closed a $250 million offering of 2.375% Subordinated Notes due 2015.
  • 2The new Subordinated Notes are designated as 'covered debt' under existing Replacement Capital Covenants (RCCs).
  • 3The 6.25% Notes due 2036 are no longer considered 'covered debt' under the original RCCs.
  • 4Amendments were made to existing RCCs to remove restrictions on repaying, redeeming, or purchasing certain junior subordinated debentures.
  • 5New Replacement Capital Covenants (New RCCs) were established for specific series of junior subordinated debentures.
  • 6The New RCCs impose restrictions on the repayment/redemption of covered junior subordinated debentures, requiring specified net cash proceeds from equity-like securities.
  • 7The Subordinated Notes will cease to be 'covered debt' under the New RCCs two years prior to their maturity or if their outstanding principal falls below $100 million.

Frequently Asked Questions

The issuance of $250 million in 2.375% Subordinated Notes due 2015 serves to refinance and manage AIG's debt structure, and importantly, these notes are designated as 'covered debt' under the company's replacement capital covenants, impacting how AIG can manage other debt obligations.

The new notes become 'covered debt' under the original RCCs, and the previously designated 6.25% Notes due 2036 are no longer considered 'covered debt'. Additionally, amendments to the original RCCs remove certain restrictions on repaying other junior subordinated debentures, as these were deemed no longer necessary for rating agency purposes.

The New RCCs, established for specific series of junior subordinated debentures, create covenants that restrict AIG from repaying, redeeming, or purchasing these debentures before their scheduled termination dates, unless AIG receives a specified amount of net cash proceeds from the sale of common stock or certain qualifying equity-like securities.

The Subordinated Notes will cease to be 'covered debt' under the New RCCs two years before their stated maturity date, or earlier if the outstanding principal amount of these notes falls below $100 million due to redemption or repurchase by AIG or its subsidiaries.