AIG 2011 Annual Report Download - page 224

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and pricing of any offering in which it participates, including any primary offering by AIG. As a result, if AIG
seeks to conduct an offering of its equity securities the Department of the Treasury may decide to participate in
the offering, and to prevent AIG from selling any equity securities.
Issuance of Warrants to Purchase AIG Common Stock
On January 19, 2011, as part of the Recapitalization, AIG issued to the holders of record of AIG Common
Stock as of January 13, 2011, by means of a dividend, ten-year warrants to purchase a total of 74,997,778 shares of
AIG Common Stock at an exercise price of $45.00 per share. AIG retained 67,650 of these warrants for tax
withholding purposes. No warrants were issued to the Trust, the Department of the Treasury or the FRBNY.
May 2011 Common Stock Offering and Sale
On May 27, 2011, AIG and the Department of the Treasury, as the selling shareholder, completed a registered
public offering of AIG Common Stock. AIG issued and sold 100 million shares of AIG Common Stock for
aggregate net proceeds of approximately $2.9 billion and the Department of the Treasury sold 200 million shares
of AIG Common Stock. AIG did not receive any of the proceeds from the sale of the shares of AIG Common
Stock by the Department of the Treasury. Of the net proceeds AIG received from this offering, $550 million has
been used to fund the Consolidated 2004 Securities Litigation settlement (see Note 16 herein). As required by the
Registration Rights Agreement, AIG paid the underwriting discount as well as certain expenses with respect to the
shares sold by the Department of the Treasury. The balance of the net proceeds was used for general corporate
purposes. As a result of the sale of AIG Common Stock in this offering, the Series G Drawdown Right was
terminated, the Series G Preferred Stock was cancelled and the ownership by the Department of the Treasury was
reduced from approximately 92 percent to approximately 77 percent of the AIG Common Stock outstanding after
the completion of the offering.
September 2011 Debt Offering
On September 13, 2011, AIG issued $1.2 billion of 4.250% Notes Due 2014 and $800 million of 4.875% Notes
Due 2016. The proceeds are being used to pay maturing notes issued by AIG to fund the Matched Investment
Program (MIP).
October 2011 Syndicated Credit and Contingent Liquidity Facilities
On October 12, 2011, the previously outstanding AIG 364-Day Syndicated Facility, AIG 3-Year Syndicated
Facility and Chartis letter of credit facility were terminated and AIG entered into a $1.5 billion 364-Day
Syndicated Facility and a $3.0 billion 4-Year Syndicated Facility. The new 4-Year Syndicated Facility provides for
$3.0 billion of revolving loans, which includes a $1.5 billion letter of credit sublimit. The $1.3 billion of previously
issued letters of credit under the Chartis letter of credit facility were rolled into the letter of credit sublimit within
the 4-Year Syndicated Facility, so that a total of $1.7 billion remains available under this facility, of which
$0.2 billion is available for letters of credit. AIG expects that it may draw down on these facilities from time to
time, and may use the proceeds for general corporate purposes.
In December 2010, AIG established a $500 million contingent liquidity facility. Under this facility, AIG has the
right, prior to December 15, 2015, to issue up to $500 million in senior debt to the counterparty, based on a put
option agreement between AIG and the counterparty. The senior debt, if issued, will mature on December 15,
2015.
In October 2011, AIG entered into an additional contingent liquidity facility. Under this facility, AIG has the
right, for a period of one year, to enter into put option agreements, with an aggregate notional amount of up to
$500 million, with an unaffiliated international financial institution pursuant to which AIG has the right, for a
210 AIG 2011 Form 10-K