This page has been archived and commenting is disabled.

Treasury Selling Another $4.5 Billion In AIG Stock, AIG To Buy $3 Billion Of Offering

Tyler Durden's picture




 

Moments ago AIG stock was halted with many scratching their heads as to the the reason why. Here it is, courtesy of Bloomberg:

  • TREASURY TO OFFER $4.5 BILLION OF AIG COMMON SHARES
  • AIG TO BUY BACK UP TO $3 BILLION OF SHARES SOLD BY TREASURY

Full release:

American International Group, Inc. (AIG) today announced that the U.S. Department of the Treasury (Treasury) has launched an offering of $4.5 billion of its AIG common stock, par value $2.50 per share (AIG Common Stock). The Treasury will also grant a 30-day option to the underwriters for the offering to purchase additional shares to cover over-allotments, if any.

 

In connection with Treasury’s offering, AIG has indicated to Treasury that it intends to purchase shares of AIG Common Stock in the offering, at the initial public offering price, pursuant to an authorization granted by the AIG Board of Directors to purchase up to $3 billion of AIG Common Stock.

 

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co., and J.P. Morgan Securities LLC have been retained as joint bookrunners for the offering.

Bottom line: another $1.5 billion in AIG shares are about to hit the market when one nets out the cash transfer between Treasury and AIG, which naturally had to be "bid" going into this announcement. Of course, in this broken market this will be seen as bullish. At least initially. Then the selloff. Or not. Who cares anymore.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 08/03/2012 - 14:18 | 2676384 Silver Bug
Silver Bug's picture

What a complete joke. Could this be any more of a farce.

 

http://ericsprott.blogspot.ca/

Fri, 08/03/2012 - 14:24 | 2676403 engineertheeconomy
engineertheeconomy's picture

"German Debt Auction" in the news today should instead read "German Slave Auction"

Fri, 08/03/2012 - 14:48 | 2676474 camaro68ss
camaro68ss's picture

glad i cashed out my 401k, yes it did not turn into a 201k, with AIG 4 months ago.

Suck it AIG

Fri, 08/03/2012 - 15:03 | 2676518 MillionDollarBonus_
MillionDollarBonus_'s picture

Yet another successful PP initiative that, despite the ramblings of doomer libertarians has turned out to be a shining success. I predict that this offering will be well bid, just like the last one. AIG is a sterling corporation, that just made a FEW mistakes. But spiteful libertarians are so caught up with criticizing the emergency financing, that they ignore the facts. It's pretty sad, when you think about it. 

Fri, 08/03/2012 - 15:49 | 2676632 El Oregonian
El Oregonian's picture

I gave you a "Greenie" just because your a persistent troll-bot. I mean, really... How can someone constantly absorb rejection on a daily basis on your "Market-Love Fest, that everything is beautiful in the markets with these rose-colored glasses I wear".

Personally, I am not the brightest bulb but thanks to you I look like a 100,000 Watt Halogen floodlight genius of critical thinking.

Thumbs up MDB, you make me look good!

BTW if they NEEDED "Emergency Financing" tells me they were not so sterling... Just saying...

Fri, 08/03/2012 - 16:33 | 2676785 Winston Churchill
Winston Churchill's picture

Don't you get MDB.

His posts are always just trying to get a 'rise' out of someone.

You're todays victim.

Fri, 08/03/2012 - 17:01 | 2676844 El Oregonian
El Oregonian's picture

No, I get it. I haven't just fallen off the turnip truck, I just chuckle and shake my head 99.9% of the time I read his comments.

Kinda like reading the daily funnies in the paper.

I'm glad he's here for the comic relief and incourage him every once  in awhile (you know, throw him a bone) just so I can get my daily laugh.

I'd sure hate to lose the "Suspension of Dis-belief" moments he brings...

No victim... Just a bone once in awhile for a good carney barker...

Sun, 08/05/2012 - 00:28 | 2679019 otto skorzeny
otto skorzeny's picture

more clever than the "stack silver"/"got lead?" pablum ad nauseum

Mon, 08/06/2012 - 01:25 | 2680937 MeelionDollerBogus
MeelionDollerBogus's picture

OMG. Don't you realize the two event-space inflections being tested here?!

CONDITION 1: negative replies to MDB consistently go up

CONDITION 2: green-arrows consistently out-number red-arrows for MDB

Each such condition describes a heuristic for market & reader sentiment.

Man, must everything be spelled out down to the pixel and operand?

 

Fri, 08/03/2012 - 14:25 | 2676409 fonestar
fonestar's picture

rigged market crapitalism

Fri, 08/03/2012 - 14:27 | 2676416 HelluvaEngineer
HelluvaEngineer's picture

This is the dumbest thing I've heard today, and that's really saying something.

Fri, 08/03/2012 - 14:54 | 2676490 aint no fortuna...
aint no fortunate son's picture

Somebody better tell the specialist what happened - he must be taking one hell of a dump - announcement via ZH was at 2:17... its 2:53 now and still halted...

Fri, 08/03/2012 - 14:21 | 2676390 LawsofPhysics
LawsofPhysics's picture

I thought the government, when using taxpayers monies  was only allowed to buy high and sell low?  I am confused.  Anyone know what the taxpayer paid for those shares?

Fri, 08/03/2012 - 14:33 | 2676435 fuu
fuu's picture

As of January 2012, TARP had about $50 billion invested in AIG according to one report. Break even for the government was figured at $28.73 a share v. then-current share price of about $25.[56]

http://en.wikipedia.org/wiki/American_International_Group#Federal_Reserve_bailout

Fri, 08/03/2012 - 14:41 | 2676457 LawsofPhysics
LawsofPhysics's picture

So, in other words, the taxpayer is losing their ass on this, end this CORPERATE WELFARE bullshit.

Fri, 08/03/2012 - 15:12 | 2676524 fuu
fuu's picture

Perhaps the $2.50/share is a typo in the release.

Fri, 08/03/2012 - 15:24 | 2676580 LawsofPhysics
LawsofPhysics's picture

"Par value" will be decided to the benefit of someone, but most likely not the taxpayer.

Fri, 08/03/2012 - 15:57 | 2676678 deepdish
deepdish's picture

Par value was decided several decades ago.

Fri, 08/03/2012 - 15:00 | 2676438 hedgeless_horseman
hedgeless_horseman's picture

 

 

I can't wait to watch AIG's chairman when he airs his television commercial...

"...That's why I am here to announce we have repaid our government loans..."

Fuck you, Ed Whitacre, you lying cock sucker!

More than a year after G.M.’s return to public ownership, the government still owns just less than 30 percent of the company, or about 500 million shares.

Fuck you, GM! 

Fuck you AIG!

Fuck moral hazard

 

 

Fri, 08/03/2012 - 16:04 | 2676709 Hi Ho Silver
Hi Ho Silver's picture

Get a grip. AIG is not GM.

AIG has paid back the Fed and is now in striking distance of making the U.S. taxpayer whole.

Thanks to Robert Benmosche, and thousands of employees who put nose to grindstone, American citizens won't foot the bill for the greed of a few handfuls. At least not in this case.

Disclosure: I lost about $40k when AIG crashed. I think the bailout was fascist and wrong. But I'm not going to let that blind me to AIG's potential for profit in the coming seasons.

In the auto industry my money's on Ford.

Fri, 08/03/2012 - 16:34 | 2676777 hedgeless_horseman
hedgeless_horseman's picture

 

 

AIG is a poster child for socializing losses and privatizing gains. 

AIG's bond traders are best catagorized by the statement that everyone is a genius in a bull market.

I'm not going to let that blind me to AIG's potential for profit in the coming seasons.

What about AIG's potential for loss?  Oh yeah, you have the taxpayer to cover that outcome.

 

Sun, 08/05/2012 - 00:31 | 2679024 otto skorzeny
otto skorzeny's picture

good luck w/POS ford- the only reason their sales were decent was because the japs couldn'y get their stuff to market- now they are and Big 3 are headed down. Chrysler will plummet beacause they make gas hogs and gas is climbing rapidly again

Mon, 09/10/2012 - 22:37 | 2780619 TheFineKid
TheFineKid's picture

Didn't Chrysler sell Jeep to Fiat? About every third car I see on the road lately is a Jeep Wrangler.

Fri, 08/03/2012 - 15:11 | 2676541 deepdish
deepdish's picture

28.72 per share.

 

Has sold in several patches so far. At 29, 29 and 30.5 per share.

 

 

Fri, 08/03/2012 - 15:51 | 2676627 LawsofPhysics
LawsofPhysics's picture

Don't confuse the sheeple.

Fri, 08/03/2012 - 16:52 | 2676822 Rainman
Rainman's picture

AIG reverse split was 1-20 three years ago

http://in.reuters.com/article/2009/07/01/idINN0149895120090701

Fri, 08/03/2012 - 14:20 | 2676392 slaughterer
slaughterer's picture

A logical reaction to this would be a 3% plunge in AIG SP, but the algos will just see the words "AIG share buy"

Fri, 08/03/2012 - 14:21 | 2676394 Seasmoke
Seasmoke's picture

there is so much paper everywhere !!!!!!!.........careful with the paper cuts

Fri, 08/03/2012 - 14:22 | 2676397 SeverinSlade
SeverinSlade's picture

If AIG is so healthy, why didn't they buy all of the $4.5 billion?

Fri, 08/03/2012 - 14:24 | 2676404 slaughterer
slaughterer's picture

Since Hilsenrath did not work, this news needs to push the S&P above 1400. 

Fri, 08/03/2012 - 15:19 | 2676567 Dr. Engali
Dr. Engali's picture

1400 to 1425 , is going to be  resistance the market can't break through.

Fri, 08/03/2012 - 14:24 | 2676406 francis_sawyer
francis_sawyer's picture

I just called my broker & told him to get me in 45 degrees at any price...

Fri, 08/03/2012 - 14:25 | 2676408 fonzannoon
fonzannoon's picture

Is the money from this sale and example of freeing up assets to repo to the banks as per the prior threads?

Fri, 08/03/2012 - 14:26 | 2676413 AT
Fri, 08/03/2012 - 14:29 | 2676424 fonzannoon
fonzannoon's picture

This Knight capital thing seems to be going the other way.

Fri, 08/03/2012 - 14:33 | 2676436 Dr. Engali
Dr. Engali's picture

Nobody wants to be on either side of that trade going into the weekend. Who knows what can happen over the weekend. They could be scooped up for a buck or five bucks. Either way it's probably best to take profits and walk away.

Fri, 08/03/2012 - 14:38 | 2676451 slaughterer
slaughterer's picture

Took my prodits already.  Of course, I am jealous of anyone still holding KCG.  But I could not justify holding KCG this weekend with only a one-day LOC on deck. 

Fri, 08/03/2012 - 14:47 | 2676472 Dr. Engali
Dr. Engali's picture

There is no reason to be jealous. You made a good trade and a hefty profit. Greed will get people every time. The bids will start drying up soon when the shorts are done covering.

Fri, 08/03/2012 - 14:29 | 2676427 mt paul
mt paul's picture

yep

better post that on my facebook

not

Fri, 08/03/2012 - 14:37 | 2676450 greensnacks
greensnacks's picture

Wondering how many drought strickened farms aig insured.

Fri, 08/03/2012 - 14:50 | 2676477 francis_sawyer
francis_sawyer's picture

You'll get an accounting on that when your next tax bill arrives...

Fri, 08/03/2012 - 14:46 | 2676469 larz
larz's picture

Step aside ill take a 500 large worth

Fri, 08/03/2012 - 14:48 | 2676473 km4
km4's picture

Just like David said here....

David Stockman: "The Capital Markets Are Simply A Branch Casino Of The Central Bank"

http://www.zerohedge.com/news/david-stockman-capital-markets-are-simply-branch-casino-central-bank#comment-2647577

Alex: It sounds like what you're saying is that the Fed is effectively paying bankers to stay confident in the Fed, and that the moment that stops – either because the Fed stops paying them or something else shakes their confidence – this all goes down in one big house of cards?

David: Yes, I think that's right. The Fed has destroyed the money market. It has destroyed the capital markets. They have something that you can see on the screen called an "interest rate." That isn't a market price of money or a market price of five-year debt capital. That is an administered price that the Fed has set and that every trader watches by the minute to make sure that he's still in a positive spread. And you can't have capitalism if the capital markets are dead, if the capital markets are simply a branch office – branch casino – of the central bank. That's essentially what we have today.

Alex: That's a pretty stark picture. So as an individual investor, what are we to do? How do we protect ourselves in this type of situation? Should I be owning bonds and staying out of stocks? Should I be owning stocks?

David: No, I would stay out of any security markets. These are unsafe markets at any speed. It's all tied together. As I was saying when the great margin call comes and they start selling the Treasury bond, they'll take everything else with it. Real estate is priced off Treasuries. Mortgaged-backed securities are priced off Treasuries. Corporates are priced off Treasuries. Junk bonds are priced off Treasuries. Everything. The stock market will go into a panic. We don't know when the timing will come – we've never been in a world where there is $15 trillion worth of central-bank balance sheets, like we have today. The only thing I think you can conclude is preservation is the only thing you are about as an investor. Forget about yield. Forget about return. Just keep yourself liquid and preserve your capital, because you can't predict the day when, as I say, the great margin call in the sky comes down.

Fri, 08/03/2012 - 14:49 | 2676476 Hype Alert
Hype Alert's picture

So AIG is buying it's stock back from the Treasury with money borrowed from the Treasury, so net-net what is happening?  Nothing?

Fri, 08/03/2012 - 14:57 | 2676501 LawsofPhysics
LawsofPhysics's picture

The taxpayer is paying for the difference.  Bought @ over $25, selling at less than $2.  Socialization of losses bitch, what are you going to do about it?

Fri, 08/03/2012 - 15:07 | 2676531 deepdish
deepdish's picture

Huh? Selling at 2? The selling share price has not been decided yet. The 2.5 dollar noted in the article is tha par value and has nothing to do with the selling price.

 

The last time they sold (in May), they sold at 30.5 per share, and in the two offerings before that they sold at 29. The market the next days will decide the selling price.

 

But it is still a shitty deal from the government side, but not as shitty as you suggest.

Fri, 08/03/2012 - 15:15 | 2676552 LawsofPhysics
LawsofPhysics's picture

"but not as shitty as you suggest."

We will see, corporate welfare, either way.

Fri, 08/03/2012 - 15:19 | 2676568 deepdish
deepdish's picture

The system is a corrupt cleptocracy, heavily tilted toward a fascistic corporative Mussolini like mixture of state and corporate interests.

 

But there is no point in making up taxpayer losses in order to deliver the message. It is bad enough as it is without mixing up par stock values with the stock price.

Fri, 08/03/2012 - 15:22 | 2676573 LawsofPhysics
LawsofPhysics's picture

correct, "par value" will be decided to someone's benefit, and it certainly won't be to the benefit of the taxpayers, who kept this shell of a company alive.  Atlas, continues to shrug, and that which cannot be sustained, won't be. 

Fri, 08/03/2012 - 15:41 | 2676612 deepdish
deepdish's picture

No. Par value is par value. It has nothing to do with stock price.

 

When a company is started, the stock has to have a par value. It has no relation to stock value, it is just that the rules says that the par value must be noted. The rules also say that it is illegal to offer a stock offering below par value.

 

Example. I start a company with 1000 shares. I put in 100 dollar per share in equity, so that the equity is 100 000 dollar. I throw a dice to find a number I can call par value, and I hit number 1. I will then chose par value at 1 dollar per share.

Technically, my balance sheet will now show:

Cash: 100 000

 

Common stock: 1000

Paid in equity in excess of par value: 99 000

 

See? It is just a techical term, and it shows a lack of understanding to bring it up in this debate.

Fri, 08/03/2012 - 15:50 | 2676637 LawsofPhysics
LawsofPhysics's picture

Of course if you rolled a different numer, the paid in equity changes.  Depending on the number, it might be better to be on one side of that paid in equity or the other.  If the number is "meaningless" why role the fucking dice to begin with?  Like everything else in eCONomics, baffle them with bullshit.

Fri, 08/03/2012 - 15:53 | 2676657 deepdish
deepdish's picture

No.

The paid in equity do not change.

If i roll 2 we will get this balance sheet:

 

Cash: 100 000

 

Common stock: 2000

Paid in capital in excess of par value: 98 000

 

The paid in capital will still be 100 000.

 

You are on the wrong track when you start to look at the par value. It was probably decided lots of years ago, long before the financial crisis and long before Bernanke became the chief of Fed.

 

Fri, 08/03/2012 - 15:55 | 2676666 fuu
fuu's picture

Thanks for clearing that up.

Fri, 08/03/2012 - 15:59 | 2676667 deepdish
deepdish's picture

Sigh. You obviously have never started a company.

Fri, 08/03/2012 - 15:02 | 2676516 Winston Churchill
Winston Churchill's picture

Whats the difference between Manchester United and AIG ?

Fri, 08/03/2012 - 15:10 | 2676537 CheapBastard
CheapBastard's picture

I read Orange County pension fund is $10 billion underfunded. I also read their solution may be to sell $250 million in bonds to pay for current needs and guess who will buy the $250 million bonds?.....Orange County will buy their own bond issue, of course:

 

"The Orange County Employees Retirement System – which has assets valued at some $10 billion — also happens to be about $10 billion shy of what it needs to fulfill its pension promises to workers, according to a study of California’s largest independent pension systems by researchers at Stanford University."

 

http://taxdollars.ocregister.com/2012/03/09/stanford-o-c-retirement-syst...

Fri, 08/03/2012 - 15:16 | 2676555 CheapBastard
CheapBastard's picture

Ready for the "Marketplace Fairness tax?"

 

"A two-front assault on Web shoppers is in full force — Congress is considering legislation that would pave the way for states to force sales tax on point-and-click shoppers, and Amazon.com is making numerous one-off deals with individual states, where it will be collecting taxes no matter what Congress does. Together, these two developments make an Internet sales tax all but inevitable.

Texas and New York residents will pay about $1.8 billion more; Californians, $4.2 billion. That's real money."

 

full story:

http://redtape.nbcnews.com/_news/2012/08/03/13089943-no-one-will-say-the...

Fri, 08/03/2012 - 23:17 | 2677492 e-man
e-man's picture

re: Ready for the "Marketplace Fairness tax?"

 

You know, I was wondering if that story wasn't just a plant.  People reading it would be inclined to push spending forward to avoid the new tax and thus make the economy appear to be improving.  Just a thought.

Fri, 08/03/2012 - 15:21 | 2676570 rlouis
rlouis's picture

Today's best example of putting lip stick on a pig.

Fri, 08/03/2012 - 15:42 | 2676618 fuu
fuu's picture

"Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co., and J.P. Morgan Securities LLC have been retained as joint bookrunners for the offering. "

Bookies milking the gamblers.

Fri, 08/03/2012 - 16:09 | 2676725 ultraticum
ultraticum's picture

Didn't Gold in Sacks already "run the books" once?

Fri, 08/03/2012 - 20:22 | 2677255 ebworthen
ebworthen's picture

Another circle jerk, with the taxpayer left to clean up the mess with $40,000 Q-Tips.

Fri, 08/03/2012 - 21:57 | 2677402 NOPOMO
NOPOMO's picture

Any moral regulatory agency would have declared this sham bankrupt.  Until we can accept there are losers, we will not recover.  Putting lipstick on all the zombies does not make them look sexy...they still smell foul.

This system is not to be trusted or accepted by the general public.  Let the banksters trade their garbage with one another.  They should feast on their own fecal matter.

 

NOPOMO

Do NOT follow this link or you will be banned from the site!