AIG 2005 Annual Report Download - page 158

Notes to Consolidated Financial Statements Continued
(e) Loans and Mortgages Payable:
9. Debt Outstanding
Continued Loans and mortgages payable at December 31, 2005,
convert the debentures into shares of AIG common stock at a consisted of the following:
conversion rate of 6.0627 shares per $1,000 principal amount
Uncollateralized Collateralized
of debentures on any day if AIG’s common stock price exceeds Loans Loans and
120 percent of the conversion price on the last trading day of (in millions) Payable Mortgages Payable
the preceding fiscal quarter for a set period of time, and after AIG Finance (Hong Kong)
September 30, 2031, on any day if AIG’s common stock price Limited $ 183 $ –
exceeds such amount for one day, subject to certain AIGCFG 864 –
restrictions. The debentures are redeemable by AIG on or after AIG 814 –
November 9, 2006 at specified redemption prices. Holders may Other subsidiaries 618 309
require AIG to repurchase the debentures at specified Total $2,479 $309
repurchase prices on November 9, 2006, 2011, 2016, 2021, and
2026. At December 31, 2005, the debentures outstanding had (f) Liabilities Connected to Trust Preferred Stock: AGC issued
a face value of $1.52 billion, unamortized discount of Junior Subordinated Debentures (liabilities) to four trusts
$460 million and a net book value of $1.06 billion. The established by AGC, which represent the sole assets of the
amortization of the original issue discount was recorded as a trusts. The trusts have no independent operations. The trusts
component of other operating expenses. issued mandatory redeemable preferred stock to investors. The
interest terms and payment dates of the liabilities correspond
(B) Notes and Debentures Issued by SAI: As of to those of the preferred stock. AGC’s obligations with respect
December 31, 2005, notes and debentures originally issued by to the liabilities and related agreements, when taken together,
SAI aggregating $435 million (net of unamortized discount of constitute a full and unconditional guarantee by AGC of
$40 million) were outstanding with maturity dates from 2007 payments due on the preferred securities. The liabilities are
to 2097 at interest rates ranging from 5.60 percent to redeemable, under certain conditions, at the option of AGC
9.95 percent. on a proportionate basis.
(C) Term Notes: On September 30, 2005, AIG sold The preferred stock consists of $300 million liquidation
$1.5 billion principal amount of notes in a Rule 144A/ value of 8.5 percent preferred stock issued by American
Regulation S offering, $500 million of which bear interest at a General Capital II in June 2000, $500 million liquidation
rate of 4.700 percent per annum and mature in 2010 and value of 8.125 percent preferred stock issued by American
$1.0 billion of which bear interest at a rate of 5.050 percent General Institutional Capital B in March 1997, and $500 mil-
per annum and mature in 2015. The notes are senior lion liquidation value of 7.57 percent preferred stock issued by
unsecured obligations of AIG and rank equally with all of American General Institutional Capital A in December 1996.
AIG’s other senior debt outstanding. AIG has agreed to use In December 2005, $100 million liquidation value of 8.05
commercially reasonable efforts to consummate an exchange percent preferred stock were redeemed by American General
offer for the notes pursuant to an effective registration Capital III.
statement within 360 days of the date on which the notes were (g) Revolving Credit Facilities: AIG and AIG Funding, Inc.
issued. (AIG Funding) are parties to unsecured syndicated revolving
On May 15, 2003, AIG sold $1.5 billion principal amount credit facilities aggregating $2.75 billion, consisting of $1.375 bil-
of notes in a Rule 144A/Regulation S offering, $500 million of lion in a 364-day revolving credit facility that expires in July of
which bear interest at a rate of 2.875 percent per annum and 2006 and $1.375 billion in a five-year revolving credit facility
mature in 2008 and $1.0 billion of which bear interest at a that expires in July of 2010. The 364-day facility allows for the
rate of 4.250 percent per annum and mature in 2013. The conversion by AIG of any outstanding loans at expiration into
notes are senior unsecured obligations of AIG and rank equally one-year term loans. The facilities can be used for general
with all of AIG’s other senior debt outstanding. AIG corporate purposes and also to provide backup for AIG’s
completed an exchange offer in April 2004 with respect to the commercial paper programs administered by AIG Funding. AIG
Rule 144A/Regulation S Notes and issued in exchange expects to replace or extend these credit facilities on or prior to
substantially identical notes that are registered under the their expiration. There are currently no borrowings outstanding
Securities Act. under these facilities, nor were any borrowings outstanding as of
(v) Notes and Bonds Payable Issued by AGC: As of December 31, 2005.
December 31, 2005, AGC notes aggregating $797 million were In November 2005, AIG and AIG Funding entered into a
outstanding with maturity dates ranging from 2010 to 2029 at 364-day revolving credit facility for an aggregate amount of
interest rates ranging up to 7.75 percent. $3 billion, which can be drawn in the form of loans or letters
As of November 2001, AIG guaranteed the notes and of credit. The credit facility expires in November 2006 but
bonds of AGC. allows for the issuance of letters of credit with terms of up to
ten years and provides for the conversion by AIG of any
outstanding loans at expiration into one-year term loans. The
facility can be used for general corporate purposes, including
106 AIG m Form 10-K