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AIG Converts Blackstone Shares

Posted on 03 Jan 2011

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American International Group Inc. (AIG) has converted 35.7 million partnership units in Blackstone Group LP into the same amount of common shares that can be more easily sold in the public market.The shares represent an 11.7% stake in the global investment manager. The shares, expected to be delivered on Feb. 9, is worth $506.7 million at Blackstone's current share price.

AIG, in a regulatory filing earlier this month, disclosed that it had converted 10 million Blackstone partnership units for common shares on Nov. 15. The shares were delivered and sold on Dec. 15 for $13.41 each. However, person familiar with the situation said AIG has not made a decision on whether to sell. The insurer has no urgent need to offload the rest of its Blackstone stake and will only do so if it can get good value for AIG shareholders, the person added.

AIG, which still owes the government around $90 billion, has completed or is in the progress of completing over $40 billion in asset sales, including a stake in pan-Asian insurer AIA Group Ltd. via an initial public offering and its second-largest foreign life-insurance business, Alico, to MetLife Inc. for $16.2 billion. The company is close to choosing a buyer for its Taiwanese unit, Nan Shan Life Insurance Co., which could fetch over $2 billion.

It has also announced plans to repay another $49 billion through sales of the government's majority stake in the company, which has an implied value of over $70 billion. Together, these amounts are already more than enough to repay the company's taxpayer obligations.