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New York TimesThe American International Group said Thursday that it had reached an agreement in principle to repay the Federal Reserve Bank of New York for the company’s 2008 rescue, and to gradually return the ownership of its stock to the public markets.
The company and its rescuers in the federal government have been working intently in recent weeks to complete such a plan before the expiration of the Treasury’s Troubled Asset Relief Program on Oct. 3, and before the Fed’s bailout loan came due. The original terms called for A.I.G. to pay back the Fed within two years. Under the plan, the Treasury Department will, for a time, own 92.1 percent of A.I.G. before it begins to sell it shares.
Because A.I.G. turned out to need a bigger rescue package than first expected, the Fed loan changed, and the insurance giant now owes the Fed about $46 billion in two forms: about $20 billion in borrowings under the original revolving credit facility, and a $26 billion preferred stake that the company must redeem. A.I.G. said it would repay those amounts by the end of March 2011.
The company said it would use its own resources to pay back the $20 billion in loans, including the proceeds it expects to receive from the sale of a big overseas life insurance unit to MetLife. That sale, announced in March, should yield $6.8 billion in cash and $8.7 billion in MetLife stock, and close by the end of the year.
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http://www.nytimes.com/2010/10/01/business/01aig.html