Investor group working with AIG to thwart Fed takeover

By Lilla Zuill

NEW YORK (Reuters) - American International Group Inc (AIG.N) is cooperating with a large investor group working to thwart a government takeover, a lawyer for investors said.

Representatives of the investor group will be briefed by the company on its financial position as early as Tuesday afternoon, said Mickey Kantor, of law firm Mayer Brown.

CEO Edward Liddy and others at AIG "could not be more cooperative," Kantor added.

AIG declined to comment.

The investor group represents more than a third of all AIG stockholders, including pension funds, and current and retired employees, Kantor said.

"We think it is in the best interest of the company to put some plan in place," he added.

Former CEO Maurice "Hank" Greenberg, AIG's largest individual shareholder, has thrown his support behind the investor group, said a spokesman.

Investors have much at stake. AIG's stock has fallen more than 90 percent over the past year, and will have little chance of recovery if the federal government -- which stepped in to keep the insurer from collapse with an $85 billion credit facility -- exercises warrants for up to 80 percent ownership.

AIG is to repay the government loan with proceeds from asset sales.

On paper, AIG has a net saleable value of $82 billion -- equal to more than $30 a share -- Credit Suisse said in a research note on Tuesday.

The net figure assumes AIG will pay in excess of $30 billion to rid its balance sheet of thorny liabilities, including credit default swaps on mortgage-linked derivatives that triggered $18 billion in losses over the past three quarters.

Shares of AIG closed up 6 percent at $5 Tuesday on the New York Stock Exchange.

Still, analyst Tom Gallagher said investors face hurdles in being able to outmaneuver the government taking majority ownership.

"Some hurdles to getting this done would include raising that much cash in a short amount of time ... and uncertainty over whether there will be a shareholder vote regarding approval of the terms with government."

The New York Insurance Department -- appointed to oversee AIG's insurance operations in the wake of the federal bailout -- would evaluate any proposal presented, said spokesman David Neustadt.