The US Department of Treasury has sold a portion of its shares in American International Group (AIG) for $29 each, further reducing the government's holding to 70% in the insurer more than three years after it was rescued during the financial crisis as part of the Troubled Assed Relief Program (TARP).
The sale of 206.9 million shares is expected to bring $6bn back the Treasury, which also reached a deal with AIG to repay the Federal Reserve Bank of New York’s remaining $8.5bn preferred stock investment in the company.
AIG has agreed to buy back 103.5 million shares worth $3bn, which may help prevent the Treasury’s sale from weighing on AIG’s share price.
AIG had announced a separate $1bn share buyback programme, but had only purchased $40m in the fourth quarter of 2011.
The Treasury said the sale is part of the ongoing efforts to close the TARP, a financial bailout programme created in the depth of financial crisis to prevent a collapse of the banking system.
Treasury assistant secretary for financial stability Tim Massad said the department is continuing to move forward to wind down TARP and exit its stakes in private companies as soon as practicable.
The US wanted to sell off more of its holdings in late 2011, but the sale was delayed when the shares fell in the second half of 2011 and traded below $28.73.
The traders, however, experienced loss on the deal as AIG’s shares were down 2.7% to $28.67 following the closing.