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AIG Sets September Deadline on Jet Leasing Unit Sale

Source: Dow Jones

Posted on 15 Aug 2013 by Neilson

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American International Group Inc. (AIG) has set an internal deadline of September for a Chinese consortium to come up with the money to close the delayed $4.7 billion sale of AIG's aircraft-leasing unit, according to a person with knowledge of the situation.

The insurance giant has spent four years trying to sell or float Los Angeles-based International Lease Finance Corp., and last December struck an agreement to sell a majority stake to the Chinese consortium, which subsequently missed a series of payment deadlines.

AIG is free to seek alternative buyers or pursue an initial public offering, and the prospects for a flotation have brightened in recent months as ILFC has returned to sustained profitability and aircraft rental rates have increased, lifted by a spike in new deliveries over the next several years that's expected to see more airlines opt to rent rather than buy jets.

The deadline for closing was extended from May to July 31, and though the consortium finally paid a 10% deposit in June, AIG executives are now approaching a final decision on the transaction's fate.

The company shelved plans to take ILFC public last year because of poor market conditions, but has revived preparations for an as-yet unscheduled investor road show, should the Chinese deal collapse.

A consortium spokesman on Wednesday declined comment. AIG also declined comment.