IMPORTANT ! 80% stake ONLY if loan NOT paid.
Please see the latest news/clarification posted at 7.52 pm on yahoo. Or am I missing something?
He said he hoped AIG would be able to pay back the Federal Reserve loan "as quickly as possible." If the loan is not repaid, the U.S. government has the right to take an almost 80 percent stake in the company.
Like you I am also a little confused after hearing the interview and reading the article link. My thinking is that even in the worst case scenario that the Gov. gets the 80% stake and excersise the warrants at a later time, we should be fine and here's why.
This stock should never have been at this level to begin with because they are not insolvent jsut need cash flow in the near term.
When this cash flow issue is resolved with some asset liquidation and with the gov. buying bad debts, AIG will not bleed cash any more and the other money making divisons will pull this stock up quickly.
If you look at anytime frame 1, 2, 3, ,4 or 6 months ago where AIG was $20.00-$50.00/share, this stock should easily get back to that range when this blows over. Thus in the worst case, let's say AIG gets back to $40.00 in 2yrs and the Gov excercise the warrants to double the oustanding shares, AIG would still be worth more than the mere $5.00 right now.
Just my thoughts on ahy AIG will continue to move up slowly.
its utter shame that the investors relations department of AIG is not clarifying anything on their own website about the deal.
Regardless of anything, I expect a price of $10 this week.
Does anyone know the outcome of meeting with major shareholders which was expected today?
Significant Dilution Even With Loan Repayment
“We have just under 3 billion shares outstanding now and the convertible preferred will result in a very large increase in that number of shares. I do fully expect that the government will get repaid all the money that they've loaned us and they will want in return for that any upside so I think, that convertible preferred will in fact get exercised." - Edward Liddy
I do fully expect that the government will get repaid all the money that they've loaned us and they will want in return for that any upside so I think, that convertible preferred will in fact get exercised." - Edward Liddy
I read that as meaning the govnt wants to be repaid their loan,plus they will want to take advantage of any upside in the stock price by exercising their convertible preferred shares.
That means the stock price has to rise in order for them to want to excercise their option and Liddy is expecting the stock price to rise....
What price do you think the stock will rise to after the loan has been paid off?
Yep...a heck of alot higher than today's price!
Does anyone know when they can excercise their options?