A time restriction on
American International Group’s (AIG) sale of equity securities it
acquired when it sold its American Life Insurance Company (Alico)
to fellow US insurer MetLife has been waived by MetLife.
AIG announced that it agreed
to sell Alico to MetLife in March 2010 for $16.2bn of which $7.2bn
was in cash and the remainder in MetLife securities. The deal was
closed on 1 November 2010.
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Under the original terms of
the sale, AIG agreed to hold the MetLife securities for at least
nine months from the date of closing.
AIG received 78.2m shares of
MetLife ordinary shares, MetLife preferred stock equivalent to
68.6m shares of ordinary shares and MetLife equity units with a
stated value of $3bn that are ultimately convertible into at least
67.8m MetLife ordinary shares.
Under the terms of the latest
agreement, MetLife gave permission to AIG to sell the ordinary
shares and equity units in underwritten public offerings while
MetLife purchased the preferred stock from AIG.
Sales of all MetLife equity
securities held by AIG were executed on 8 March, six days after the
announcement of the revised agreement.
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By GlobalDataAIG announced on 8 March that
the aggregate proceeds of the sale before expenses came to
approximately $9.6bn.
Also on 8 March, the US
Treasury announced that it had received a $6.9bn repayment from
AIG. According to the Treasury, AIG used $6.6bn of the $9.6bn of
proceeds it received from the sale of its equity stake in MetLife
to make the repayment.
Additionally, $300m
previously held in anticipation of expenses related to the sale of
Alico to MetLife was paid to the Treasury, bringing the total
amount repaid to $6.9bn.
AIG noted that agreements
with MetLife relating to the Alico sale require that $3bn of that
amount be placed into escrow as substitute collateral for the
MetLife common equity units sold.
The $3bn will be released
according to agreed minimum holding periods over the next two
years.
The payment to the Treasury
was the fourth by AIG in 2011 and brought the total for the year to
date to $36bn.
Of the total, $20.7bn was paid to the Federal Reserve Bank
of New York and represented the outstanding balance owed on a
credit facility extended by the bank to AIG.
