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American International Group, Inc. Message Board

  • softpro34 softpro34 Sep 22, 2008 8:22 PM Flag

    IMPORTANT ! 80% stake ONLY if loan NOT paid.

    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?


    http://biz.yahoo.com/rb/080922/aig_ceo.html?.v=2

    Quote
    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.
    Unquote

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    • 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.

    • 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

      http://www.cnbc.com/id/15840232?video=864181431

      • 3 Replies to df3_tdw
      • 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?

      • For the loan, the government wants interest. Understandable. But why the equity even if the loan is paid back? And how do you explain the yahoo link?

      • he did say that in the interview but why the quote below??


        "I hope within the next seven to 10 days to be out there with a plan that lists everything that's for sale and maybe even execute some of those transactions by then," said Liddy, a former CEO of insurer Allstate Corp (NYSE:ALL - News).

        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.

    • That is what I thought I has heard as well.

      This is a screaming buy.

 
AIG
53.00+2.48(+4.91%)Feb 12 4:01 PMEST