Summary
AMERICAN INTERNATIONAL GROUP, INC. (AIG) filed an 8-K on March 14, 2019, to report the closing of a public offering of 20,000,000 depositary shares. Each depositary share represents a 1/1,000th interest in AIG's 5.85% Non-Cumulative Perpetual Preferred Stock, Series A. This offering involved the issuance of preferred stock, which has specific implications for AIG's ability to pay dividends on its common stock and other junior securities. The filing also includes the Certificate of Designations establishing the terms of this new preferred stock and details the underwriting and deposit agreements related to the offering.
Key Highlights
- 1AIG completed a public offering of 20,000,000 depositary shares representing 5.85% Non-Cumulative Perpetual Preferred Stock, Series A.
- 2The Series A Preferred Stock has a liquidation preference of $25,000 per share.
- 3The issuance of this preferred stock introduces restrictions on AIG's ability to pay dividends or acquire its common stock or other junior securities if dividends on the Series A Preferred Stock are not declared or paid.
- 4A Certificate of Designations for the Series A Preferred Stock was filed with the Secretary of State of Delaware, establishing its terms.
- 5The company entered into an Underwriting Agreement with Merrill Lynch, Morgan Stanley, and Wells Fargo Securities.
- 6A Deposit Agreement was established with Equiniti Trust Company for the depositary shares.
- 7Legal opinions regarding the legality and U.S. federal income tax considerations of the preferred stock issuance are included as exhibits.
Frequently Asked Questions
The primary event reported is the successful closing of AIG's public offering of 20,000,000 depositary shares, each representing a 1/1,000th interest in its 5.85% Non-Cumulative Perpetual Preferred Stock, Series A.
The Series A Preferred Stock has a dividend rate of 5.85% and is perpetual. Each share has a liquidation preference of $25,000. It is non-cumulative, meaning missed dividend payments are not carried forward.
The issuance of the Series A Preferred Stock imposes restrictions on AIG's ability to declare or pay dividends on, or repurchase, its common stock (or any other stock ranking junior to the preferred stock) if AIG fails to pay dividends on the preferred stock for the preceding dividend period. This could limit future distributions to common stockholders.
The depositary shares are the units sold to the public, each representing a fraction (1/1,000th) of a share of the Series A Preferred Stock. This structure is common for preferred stock issuances to facilitate trading and liquidity.