* AIG, MetLife to sell shares
* Deal will speed repayment of U.S. Treasury
* AIG shares falling closer to gov't break-even point
(Rewrites, adds background, details of offering, bylines)
By Ben Berkowitz and Alina Selyukh
NEW YORK, March 1 Bailed-out insurer American
International Group (AIG.N) will sell off its stake in MetLife
Inc (MET.N) months earlier than expected, accelerating its
repayment of the U.S. government and giving MetLife more
control of what had been an overhang for its shares.
AIG's bailout at one point reached $182 billion. At this
point, the government's investment is comprised of a 92.2
percent stake in AIG's common stock and preferred interests in
two special purpose vehicles.
The MetLife deal will let AIG pay down the Treasury's
interest in one vehicle, which held the MetLife shares. It may
also let AIG pay down part of the interest in the second
vehicle, which holds AIG's shares in AIA Group (1299.HK).
After the transactions, AIG will be able to pay down $6
billion to $7 billion of the $18.2 billion still owed on the
vehicles. The value of the AIA shares in the second vehicle is
expected to be enough to cover the balance owed.
AIG sold its international insurance business Alico to
MetLife last year for $7.2 billion cash and $9 billion in
various classes of securities. The deal included a nine-month
lockup on share sales.
Under the terms of the deal announced on Tuesday, AIG will
be able to sell its MetLife common stock and equity units in
underwritten offerings now. MetLife will directly purchase
preferred shares from AIG, using the proceeds of a common stock
For AIG, it gets access to billions of dollars of capital
months sooner than planned at favorable prices. MetLife shares
are worth nearly $6 more now than when the Alico sale closed.
"We are taking advantage of the opportunity to monetize our
interest in MetLife more quickly to continue our efforts to
repay the government," an AIG spokesman said in a statement.
The structure of the deal eliminates any risk of dilution
for MetLife above what was already expected, in addition to
giving the country's largest life insurer more control over
what could have been a drawn-out process.
"We believe it'll provide for an organized sale of
MetLife's securities," a MetLife spokesman said of the new
MetLife shares fell 2.1 percent to $43.95 in after-hours
trading. AIG shares dipped 0.5 percent to $36.50.
At current levels, the Treasury still stands to make more
than $13 billion in profits on AIG shares. It is expected to
launch a substantial offering of AIG stock -- $15 billion or
more -- in the second half of May.
(Reporting by Ben Berkowitz and Alina Selyukh; Editing by