Friday, June 04, 2010

AIG payback plan back to square one

AIG and Prudential were going to buy an Asian life insurance company, AIA, for an agreed upon $35.5 billion price tag that was projected to have accelerated AIG’s bailout repayment to the government. Instead, Prudential PLC, not to be confused with the American Insurer Prudential Financial Inc., has been trying to renegotiate the terms of the deal with AIG, offering $30.375 billion instead.

AIG has said that it considers the sale of AIA to be a crucial component of its effort to repay the more than $130 billion it has borrowed from U.S. taxpayers. AIA had planned on using the proceeds of the sale to pay down $25 billion of their own debt to the Federal Reserve.

Now that the deal has fallen through, AIG may consider an initial public offering for AIA.
According to a regulatory filing, AIG will receive a termination fee from Prudential worth $223.9 million on July 1.

Read the full article here.

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