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American International Group, Inc. Message Board

  • arbitrage_hedgie arbitrage_hedgie Aug 21, 2013 9:25 PM Flag

    ILFC thoughts

    Today there were numerous MSM reporting their doubts aboiut the sale of ILFC to a China consortium because New China Trust backed out of the deal back in May. Thanks for reporting something that happend 3 months ago, however, it does help better explain the delays we've been seeing in the deposit funding and deal closing.

    Per AIG most recent Q, page 12 provide an update on the ILFC transaction: "On July 15, 2013, the Purchaser delivered notice that it intended to exercise the Option, raising the size of the total purchase to 90 percent of the common stock of ILFC."

    I find it hard to believe that if the consortium was not going to have the funding to purchase 80%, they would send notice to AIG of their intent to exercise the option to purchase an additional 10% bringing the total to 90%. This gets done soon and we move forward with more buybacks.

    Arb

    Sentiment: Buy

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    • No real worries with ILFC. Hoping AIG rewards shareholders with a spinoff and hopefully, we receive shares.. Long Term this has No Effect if you`re long!

      • 1 Reply to insurancefla1
      • I agree. If this ILFC 90% sale is not completed, I wonder how long it would take for the IPO. My thinking is that come August 30th or sooner, if they announce the sale is not going to happen, they also provide an update on the IPO timeline. The extension that were granted earlier this you to the consortium also allow AIG to work toward an IPO and given the world already done on this possiblity in prior years, there should not be much more to do other than round up investors. Given the price is now ~5.3B vs. the ~8B or so with the prior equity valuation, we may have an easier time finding investors for the IPO in addition to the operational performace of ILFC this past year.

        Sentiment: Buy

    • It may be that they must get the entire 90% to gain interest of another buyer. Perhaps that 10% is a difference to a potential joiner of this group preferring to lock in the entire deal now rather than run into some future problem at a future date should the intent be to exercise the option anyway.

    • Interesting post. I guess we can view it as all or nothing. I think exercising the option demonstrates they believe the market is improving and the price is more than reasonable. Obviously the group wants this deal to go through but from what I've read they are about 2 billion short. I'm still skeptical but I would be quite happy to be wrong. Bring on the IPO! Cheers

      Sentiment: Strong Buy

      • 1 Reply to cactionalpha
      • The recent press makes the consortium look like amateurs, though it appears to be intended to make this mess look legitimate. At this point I'm guessing they are just hanging on to save their $400MM deposit. I'd scramble to make the deal too if I had that much money on the table. But as the saying goes, these guys appear to be "all hat and no cattle". They might make it happen yet, but their track record is against them.

 
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