American International Group Inc. (AIG) on Friday commenced an offer to exchange up to 74.5 million of its equity units, a move that comes after the U.S. government said it will sell off its stake in the insurer.
Following the exchange of the units and the government’s conversion of AIG preferred shares to common shares in the coming months, private shareholders will own about 7.9% of AIG, or about 143 million shares. The government will hold roughly 1.66 billion shares, or 92% of AIG common shares, and it has said it intends to reduce its stake over time.
“We are taking these steps to simplify our capital structure in connection with the execution of our restructuring plan with the government,” an AIG spokesman said Friday.
The units AIG seeks to acquire represent about 95% of the outstanding corporate units. The offer is equal to 0.09867 share of its common stock plus roughly $3.27 in cash. The exchange offer will expire at 11:59 p.m. New York City time on Nov. 10, unless extended or earlier terminated by AIG.
The equity units, also known as mandatory convertible securities, were originally issued in 2008, when AIG raised about $5.9 billion from selling 78.4 million units at about $75 each.