AIG 2010 Annual Report Download - page 226

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
funds drawn down by AIG under the Series G Drawdown Right from the Closing until March 31, 2012 (or the
earlier termination of the Series G Drawdown Right).
Dividends on the Series G Preferred Stock are payable on a cumulative basis at a rate per annum of 5 percent,
compounded quarterly, of the aggregate liquidation preference of the Series G Preferred Stock and may be paid,
at AIG’s option, in cash or in increases in the liquidation preference.
The available funding under the Series G Drawdown Right that may be used for general corporate purposes
will be reduced by the amount of net proceeds of future AIG equity offerings, and net proceeds from an equity
offering in excess of the available funding under the Series G Drawdown Right will be required to be used to pay
down any liquidation preference of the Series G Preferred Stock. The Series G Preferred Stock will be
redeemable at any time in cash at AIG’s option, at a redemption price equal to the liquidation preference plus
accrued and unpaid dividends.
If the Series G Preferred Stock has an outstanding aggregate liquidation preference on March 31, 2012, it will
be converted into a number of shares of AIG common stock, par value $2.50 per share (AIG Common Stock),
equal to the aggregate liquidation preference plus accrued and unpaid dividends divided by the lesser of $29.29 or
80 percent of the average volume weighted average price over 30 consecutive trading days commencing
January 20, 2011.
Exchange of AIG’s Series C, E and F Preferred Stock for AIG Common Stock and Series G Preferred Stock
At the closing of the Recapitalization:
• the shares of AIG’s Series C Perpetual, Convertible, Participating Preferred Stock, par value $5.00 per share
(the Series C Preferred Stock), held by the Trust were exchanged for 562,868,096 shares of AIG Common
Stock which were subsequently transferred by the Trust to the Department of the Treasury;
• the shares of AIG’s Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock, par value $5.00 per
share (the Series E Preferred Stock), held by the Department of the Treasury were exchanged for
924,546,133 shares of AIG Common Stock; and
• the shares of the Series F Preferred Stock held by the Department of the Treasury were exchanged for
(a) the SPV Preferred Interests, (b) 20,000 shares of the Series G Preferred Stock and (c) 167,623,733 shares
of AIG Common Stock. As a result of the Recapitalization, the Department of the Treasury holds
1,655,037,962 shares of newly issued AIG Common Stock, representing ownership of approximately
92.2 percent of the outstanding AIG Common Stock.
The issuance of AIG Common Stock in connection with the exchange for the Series C Preferred Stock, the
Series E Preferred Stock and the Series F Preferred Stock will, in future periods, significantly affect the
determination of net income attributable to common shareholders and the weighted average shares outstanding,
both of which are used to compute earnings per share.
AIG entered into a registration rights agreement with the Department of the Treasury that granted the
Department of the Treasury registration rights with respect to the shares of AIG Common Stock issued at the
Closing, including:
• the right to participate in any registered offering of AIG Common Stock by AIG after the Closing;
• the right to demand no more than twice in any 12-month period that AIG effect a registered market
offering of its shares after the earlier of August 15, 2011 and the date of AIG’s completion of a primary
equity offering;
• the right to engage in at-the-market offerings; and
210 AIG 2010 Form 10-K