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Treasury to Receive Billions in Return from AIG Stock

After bailing out American International Group, Inc. (AIG) at a price tag of $182.3 billion, Treasury and the Federal Reserve are expecting to see their full investment back, plus a return.

On Monday, Treasury estimated a return of $12.4 billion after selling about $18 billion in shares. On Tuesday, Treasury then announced it expects to see an additional $2.7 billion after underwriters exercised their over-allotment option to purchase more shares.

Treasury’s proceeds from the public offering are expected to reach $20.7 billion.

The total number of shares sold in the offering at 636.9 million, a rise from Monday’s 553.8 million shares.

Treasury agreed to sell its AIG stock at $32.50 per share, with AIG purchasing 153.8 million shares, which amounts to $5 billion of the expected proceeds from the sale.

“Taking action to stabilize AIG during the financial crisis was something the government should never have had to do, but we had no better option at the time to protect the American economy from the damage that would have been caused by the company’s collapse,” said Treasury Secretary Tim Geithner.

“To stabilize and then restructure the company with a very substantial positive gain for the American taxpayer is a significant accomplishment, but we need to continue the critical task of implementing Wall Street reform so that the American economy is never put in this position again.”

Originally, the Fed invested $112.5 billion, with a recovered amount of $130.2 billion, while Treasury invested $69.8 billion and has recovered $67.2 billion as of September 11, according to a release.

After the public offering, Treasury’s ownership of AIG’s shares will fall from 53.4 percent to 15.9 percent.


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