AIG 2010 Annual Report Download - page 390

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Repayment and Termination of the FRBNY Credit Facility – Represents net cash proceeds from the AIA IPO and the
ALICO sale used to repay the FRBNY Credit Facility. The net proceeds were held in an escrow account and
presented in Other assets at December 31, 2010. The adjustments to Other assets and Accumulated deficit also
reflect the planned write-off of the unamortized portion of the net prepaid commitment fee asset.
Repurchase and Exchange of SPV Preferred Interests – AIG used remaining net cash proceeds from the AIA IPO
and the ALICO sale (approximately $5.9 billion) and other cash (approximately $155 million) to partially repay
the SPV Preferred Interests held by the FRBNY and drew down approximately $20.3 billion under the
Department of the Treasury Commitment (Series F) to repurchase the FRBNY’s remaining SPV Preferred
Interests, which AIG then transferred to the Department of the Treasury as part of the consideration for the
exchange of the Series F Preferred Stock, referenced below. The SPV Preferred Interests held by the Department
of the Treasury will not be considered permanent equity on AIG’s balance sheet. The adjustments assume the fair
value of the preferred interests transferred to the Department of the Treasury is equal to their carrying value. The
fair value of these preferred interests may differ from this pro forma amount, which will affect the recorded value
of the preferred interests. Such determination will be completed in the first quarter of 2011.
Exchange of AIG’s Series C, E and F Preferred Stock for AIG Common Stock – The adjustments represent the
exchange of Series C Preferred Stock, Series E Preferred Stock, and Series F Preferred Stock for AIG Common
Stock and assume no difference between the carrying value of the Series E and F Preferred Stock and the fair
value 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 at December 31, 2010. These pro forma financial statements do not
contemplate a drawdown under this $2 billion expected commitment. This table does not consider the future
underwriting fees that may be incurred by the Department of Treasury, which AIG has agreed to reimburse as
part of the Recapitalization.
Divestitures
Sale of AIG Star and AIG Edison
On February 1, 2011, AIG completed the sale of its Japan-based life insurance subsidiaries, AIG Star and AIG
Edison for a total purchase price of $4.8 billion, comprising $4.2 billion in cash and $0.6 billion in the assumption
of third-party debt. AIG retained $2 billion of net cash proceeds from the sale of AIG Star and AIG Edison, for
which the Department of the Treasury provided a waiver, to use for capital support of Chartis instead of using the
amount to repay SPV Preferred Interests. See Notes 1 and 4 herein for additional information on this sale.
Sale of Nan Shan
On January 12, 2011, AIG entered into an agreement to sell its 97.57 percent interest in Nan Shan Life
Insurance Company, Ltd. (Nan Shan) for $2.16 billion in cash.
Acquisitions
On February 10, 2011, Chartis announced an all-cash tender offer for the 45.34 percent of outstanding Fuji
shares that it does not already own, as well as outstanding stock acquisition rights. The announced offering period
began February 14, 2011 and is expected to close on March 24, 2011.
374 AIG 2010 Form 10-K