[hellenmoranov]

Washington Post:
http://www.washingtonpost.com/wp-dyn...120807407.html

Insurance giant American International Group on Wednesday formalized plans to pay off its debt to the Federal Reserve Bank of New York and set the stage for the Treasury Department to sell a significant portion of its stake in the firm early next year.

...

The sale of Alico and the AIA public offering generated approximately $27 billion for the company, eclipsing the $20 billion it still owes the New York Fed.

AIG said in a statement that the move, the outline of which had been detailed earlier this fall, "marks an important step forward in our progress toward completely repaying the taxpayers."

In satisfying the New York Fed loan, AIG also clears the way for the Treasury to begin to recover its massive investment in the global insurer. According to Wednesday's filing, when the deal closes in coming weeks, the Treasury will swap its preferred shares in the company, worth about $49 billion, for nearly 1.7 billion shares of AIG common stock.

That transaction will leave the federal government with a 92.1 percent ownership stake in AIG, up from its current stake of 79.8 percent. According to the filing, the Treasury also will maintain "complete control" over the terms of any stock sales until its stake falls below 33 percent.

The deal paves the way for a potential public offering next spring in which the Treasury could sell off a sizable portion of its shares in the company.