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American International Group, Inc. Message Board

  • abcde_98 abcde_98 Dec 21, 2008 5:51 PM Flag

    Logically, AIG is broke ... here's why -->


    AIG owes $150bn

    AIG will sell much of its operations and receive maybe $40 to 50 bn.

    Of the remaining insurance portfolio, it will have
    a) lower profitability
    b) lower revenues
    and it will not be able to service (make the loan payments) the renmaining loan.

    Kiss the common shares to zero

    This topic is deleted.
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    • This was for you: Broke? I think not-
      1. A 60bn loan at a minimum of 6.5% (3mth LIBOR + 3) interest and has warrants for 2.3% of outstanding common stock. 5 year term1.

      2. A 40bn preferred equity stake that pays 10% interest and is convertible to 77.6% of outstanding common stock. AIG can buy this back for 60bn plus accrued dividends. The restrictions on the company's activities are within this pref stock agreement.

      3. The NY Fed will invest up to 30bn and AIG 5bn in a SPV that will buy "multi-sector" CDOs and cancel the CDS that AIG wrote on them. AIG does not have to pay this back.

      4. The fed will invest 22.5bn in a SPV (AIG's share: 1bn) that will buy mortgage backed securities from AIG. AIG does not have to pay this back.

      Free relief:
      52.5 bn - 6bn = 46.5bn

      MUST pay back:
      60bn (6.5% pa+)

      Can pay back when the government lets it:
      40bn (10% pa)

    • mashiach Dec 21, 2008 6:14 PM Flag

      Don't forget the Intrest rate of over 11.5 % as well

54.70-0.41(-0.74%)Jul 22 4:00 PMEDT

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