Posted on 09 Nov 2011
American International Group Inc. (AIG) said its offer to exchange up to $2.5 billion in notes attracted more than the maximum amount, leading the insurer to not accept any tenders after Tuesday's early deadline.
AIG's exchange offer was part of efforts to reduce its overall debt levels. Last week AIG also unveiled a surprise $1 billion share buyback program aimed at supporting its stock price, which has languished since a stock offering in May.
On Monday, AIG Chief Executive Robert Benmosche said the insurer's priority is reducing the government's stake in the company. The government recently owned 77% of AIG after bailing out the company in 2008. That is down from 92% after the U.S. Treasury sold $5.8 billion of its holdings at $29 a share in a "re-IPO" earlier this year.
Shares were down 3.5% at $23.23 in early trading. The stock through Tuesday's close is down 50% this year.
AIG last month had offered to exchange several series of its junior subordinated debentures, denominated in euros, British pounds and U.S. dollars for new notes with a lower principal amount. All the notes tendered for the first three series by priority were accepted.
AIG said about €591 million ($817.6 million) of its €1 billion outstanding of 4.875% euro notes will be exchanged for about €421 of new 6.797% notes due 2017.
The company said £440.2 million ($708.4 million) of its £750 million of 5.750% sterling notes will be exchanged for £323.5 million new 6.765% notes due in 2017;
It said about $312.4 million of its $1 billion of 6.250% notes will be exchanged for $256.2 million new 6.820% notes due 2037;
The company accepted 54% of the £700 million tendered in its offer to exchange £900 million of it 8.625% sterling notes; and accepted none of the $922.3 million tendered in its offer to exchange $4 billion of 8.175% notes.