AIG may seek to ease loan repayment terms: reports
NEW YORK (Reuters) - American International Group Inc (AIG.N) may seek to ease terms for repayment of a $60 billion U.S. government loan in a bid to get better prices for its assets, according to media reports.
The proposed change could allow bidders for several AIG units currently on the auction block to finance deals with more stock or other forms of non-cash consideration than currently allowed, the Financial Times and the Wall Street Journal reported, citing people familiar with the situation.
AIG spokesman David Monfried declined to comment on any specific proposal, saying the company was engaged in frequent conversations with the Fed about how to repay U.S. taxpayers as quickly as possible and maximize the value of its assets.
"Any creative way of getting there is worth considering," Monfried said. "We have not gone to the Fed with a formal request to change the terms of our agreement with the Fed or the Treasury.
"One could speculate that this comes from very interested buyers, who are hoping that the government would accept more than 10 percent equity, and hoping to take some of these wonderful assets for less cash than we and the Fed would like," Monfried said.
Under current terms, AIG's asset sales must be paid for with at least 90 percent cash.
The U.S. government bailed out AIG in September after bad mortgage bets left it on the verge of collapse. Its rescue was sweetened in November when the Federal Reserve and U.S. Treasury stepped in with more cash to buy mortgage assets that had left the insurer deeply in the red, and to ease the terms of its loan repayment.
AIG management's appeal to change the repayment terms is aimed at boosting competition in the unit sales and countering the perception that it is being forced to sell units at bargain prices to repay the loan, the Financial Times said.
AIG plans to retain its global property-casualty units and a stake in its life insurance operations but sell the rest to repay part of the government bailout, which has swelled to $152 billion.
AIG's shares were down 4 cents, or 2.6 percent, at $1.52 during afternoon trading on the New York Stock Exchange.
(Reporting by Lilla Zuill and Paritosh Bansal in New York and Ajay Kamalakaran in Bangalore; Editing by David Cowell and John Wallace)
