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AIG, whose near-collapse in the fall of 2008 led to one of the biggest bailouts of the financial crisis, sold its first new stock offering since then, pricing 300 million shares at
The sale Tuesday included 200 million shares held by the federal government, which picked up
“The decision to provide this assistance was exceptionally difficult, but it’s clear today that it was essential to stopping a financial panic, preventing a severe economic collapse and helping save American jobs,” Geithner said.
The government ended up with a small profit of about
Starting in the fall of 2008, AIG received a total of about
AIG has been paying back money as it sells some of its assets, such as 21st
But AIG retains a strong
AIG still owes the U.S. Treasury
But Obama administration officials were not regretting the timing, said
“Two and a half years ago, nobody thought we’d get a dime back, so we’re very happy,” Massad said. “We didn’t make these investments to make a profit in the first place…. We’re hopeful we can recover all the investment we made, but whether we can will depend on market conditions going forward.”
The AIG stock sale came as the
Chrysler now has repaid
AIG and the
That move, which gave the government a 92% stake, helped recapitalize the company so it could repay
Before Tuesday’s stock sale, AIG had redeemed
The stock conversion opened the door for the
AIG probably was overvalued in January “and the financials have been weak anyway,” said
Still, demand for the AIG offering started building late last week.
The pricing of Tuesday’s stock offering is key for the government as it moves toward selling additional chunks of AIG stock in the coming months, Sweet said.
If the price is too high and drops in trading Wednesday, investors will be less enthusiastic the next time the government sells some of its shares, and that will make it more difficult to unwind the
“If they want to do the second tranche and other tranches, and Obama has visions — albeit pie in the sky, in my opinion — that he’d like to spin this off by the end of 2012, this must be priced perfectly,” Sweet said.
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