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American International Group, Inc. Message Board

  • kron0414 kron0414 Sep 16, 2008 9:40 PM Flag

    Best Understanding Premarket Moves Stock to

    Most of you do not understand the agreement. Lets say AIG borrowed 85 billion on a line of credit from a bank or another source. Sure they would have to offer assets to secure the loan, but this is not a take over by the Government. It is a loan with tight terms to insure the taxpayers interest. Naturally, any lender would expect to have some say in the operation for this large of a loan, but it does not say the government is running the Company. So that means AIG can still operate and make a profit and pay the loan back. So if the shares were selling for $3.75 with the cloud of filing BK soon, then I would think staying in business and just having a large loan to repay is better. Hence, strong buy share price should go as high as $7-12 tomorrow. Most of you are so stupid that you think if the Government is loaning $85 billion and is securing the loan with 80% of the assets then you will own nothing. Well look at this way, the bank has a 100% on your house, but that does not mean they own your house. Not unless you do not pay on the loan. Same here.

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    • HMMMM, you are so wrong, first of all they are changing managment of aig appointed by the gov. second you are so brain wash by the system you dont know when the citizen are being screwed. Paulson stated he will not us taxpayers money with lehman and others.. hmmmm.. AIG should of failed and let the markets play out.

    • You left something out,the bank doesn't get 80% of your equity when you sell the house.That is what this deal is like. Fed gets and 80% equity stake period as a condition of the loan.All AIG assets are the collateral until it's repaid.Sweet deal for the fed,bad for shareholders.

    • BK is next... loan delays it. We the taxpayers will be lucky if we get 50% of back.
      Our founding fathers are turning in their graves.

    • Think again, the AIG stock is only worth whatever value is left after paying back the new $85 bn in loans with interest at LIBOR+850 (about 10%, which costs $8.5bn per year just for this financing) plus whatever existing liabilities are still outstanding after the new $85bn in proceeds are used to either post collateral or pay off some existing debt.

      The US taking 80% of the equity was just to wipe out the common - for no other reason, the gov;t is not even assured of even getting their money back on the loan plus the high interest.

      Going forward, whatever value if any might be left will now be spread over 5x the share count (1 / .2) due to the 80% dilution from the penny warrants.

      Now ask yourself, how low its going. answer is: penny stock, same as FNM, etc

    • heres my take, been around alittle, but any input is appreciated.....

      Fed takes 79.9% stake in case of default on their loan of 85 bill. 2.7 bill shares out X 5 to complete potential dilution = 13.7 bill, call it 14 bill for easy calc. the co gets a cash infusion of 85 bill. if the co. defualts the loan, it becomes Not a liability, but changes into equity(via the warrannts) at the above rate. @ 85 bill/13.7 bill. shares = 5.1$ for the feds equity stake. ITS A SECONDARY OFFERING ABOVE THE CURRENT MARKET.

      ANY THOUGHTS/??

    • well, if I read the gist of the deal correctly, the govt expects AIG to start selling off assets to pay for this loan. Presumably, AIG has good assets that it can sell off, but with this life line, they can take some time to negotiate etc.. and get better terms... so the structure of the company will change over time as the assets are sold and depending on how the remaining businesses are managed/run that will determine value of company going forward. Bottom line question is whether this is better than bankruptcy? well, probably.. but don't be surprised if AIG gets sliced and diced in 30 different parts in the future so that it is just a remnant of itself and such a reduced stature in business might be left to go bankrupt as it no longer has the far reaching tentacles to roil global markets as it is perceived today...and hence, being thrown a lifeline by FED.

    • Nice Read. I think the Fed took the position to allow time for the law to open discount windows to other industires like insurance. I expect AIG to futher negotiate this down the road and be free of the Feds interest in the company. Anyways, long 15K shares.

      • 1 Reply to wcrotty3
      • Think again, The AIG stock is only worth whatever value is left after paying back the new $85 bn in loans with interest at LIBOR+850 (about 10%, which costs $8.5bn per year just for this financing) plus whatever existing liabilities are still outstanding after the new $85bn in proceeds are used to either post collateral or pay off some existing debt.

        The US taking 80% of the equity was just to wipe out the common - for no other reason, the gov;t is not even assured of even getting their money back on the loan plus the high interest.

        Going forward, whatever value if any might be left will now be spread over 5x the share count (1 / .2) due to the 80% dilution from the penny warrants.

        Now ask yourself, how low its going.

    • WELL SAID !!!!!! also this cut from a more knowldgable article..."The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries"............................ but look at all the shorts trying to scare so many with the BS about a take over... and or all the 20 and 18 somthing year olds who can not read jumping up and down with convoluted preceptions, compairing it to FRE and FNM.. jeeeeeezzzzzzzzzzzz.... ya it is scary, but this is when one can loose big and win big... have fun either way.

    • > Most of you are so stupid that you think if the Government is loaning $85 billion and is securing the loan with 80% of the assets then you will own nothing.

      Correct. Longs will own 20% of what they did at the close of trading today, not 0%. That's 50 cents/share.

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