AIG received the 85 billion loan to shore up its finances by providing collateral for its depressed assets (CDS portfolio). It needed such a huge amount due the decrease in its credit rating automatically triggered the need for more collateral. Once it sells assets it can shore up its finances with that cash and return the 85 billion to the govt. Sure everyone is selling assets right now but most insurance companies are stable and have money to spend.
Once done the company stock should shoot up to $10 Any objectors?
let me add... they drew $46B on their line which will be repaid by sales of assets. So after interest, they will still have some amount of cash still avail from the original loan... lets assume $30B remaining proceeds after payback of the Fed. The entire company common market value is trading at $10.5B They could buyback 80% of common and park in treasury shares for the Govt trust probably with the remaining $30B.
As I recall, under the most recent extension of the SEC short selling ban, companies have free reign to repurchase their own securities. Hence there would be no dilution at all and stock would trade over $10 per share. Liddy... you listening?