In many cases, the deposit is "non refundable". It all depends on the contract. It does not matter what anyone thinks about the Chinese because in the end, it is about the contract. I find it hard to believe it is a money thing because the Chinese are loaded. I think it is not getting regulatory approval. I think they should spin off the unit and do an IPO. I would have loved the sale to have closed yesterday and then they could have continued to buy back shares or start a dividend. You can forget the hope of the dividend now.
Sentiment: Strong Buy
algeaqueen, I agree with you in spirit, but it is not a matter of deserving it or not. it is a matter of how you negotiate the deal and the language and legality of it.
AIG was not smart to do this deal , with all the costs involved, both monetary and time and lost opportunity etc, without demanding an immediate non refundable deposit of some kind.
The Chinese clearly have lost their deposit. An extension was given,however i`m positive they used a Surety Bond as a deposit that AIG will now collect. Hoping as a shareholder we now have a spinoff . Truthfully, this is a non-event for AIG and meaningless towards share price..
Sentiment: Strong Buy
I specifically asked management about the deposit Their comment was , "no comment".
My read is that the deposit is refundable, especially since one of the conditions of the sale was to get regulatory approval from both chinese and u.s. govts etc. So the chinese investors have an out, their cronies in the gov't will not let them lose the deposit if the deal does not close, they can just deny it on regulatory level if need be. I say , if need be, because it is not disclosed or clear in the SEC filings that the deposit is non refundable at any circumstances. Even the hyper bull cactionalpha acknowledges that the deposit will be returned to the chinese if no dea.
That was a poor mangagement move by AIG. They have been held up for more than half a year, and no end in sight yet.
I disagree in terms of outcome. It would have been cleaner to do the sale and then pay down that final piece of debt that would have allowed AIG to start a dividend or start a stock buyback. Benmoche has been pretty clear that he has a goal of getting income started again for shareholders because he wants a broad shareholder base again which includes long term income/growth investors.
Personally, I would rather see 100% stock buyback because of the deep discount to BV AIG represents today. I understand the competing forces in terms of how to return capital to shareholders but it was all to start after the deal with the Chinese so to that extent the plan has been delayed and shareholders getting a piece of a business of no interest to most shareholders does not appear to be the best outcome for us.