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Business Title: AIG Moves Closer To Bailout Repayment As Treasury Closes Stock-Conversion Deal Aig Bailed-out insurance giant American International Group on Friday moved closer to repaying the government for its rescue, completing a stock conversion deal with the Treasury Department that is key to unwinding the federal stake in the company. The Treasury converted the preferred shares in AIG it received as part of the complex bailout into 1.655 billion shares of common stock, increasing the government's ownership stake to 92% from 80%. The Treasury plans to sell the shares over time to end taxpayer support of the company. “Treasury remains optimistic that taxpayers will get back every dollar of their investment in AIG,” said Treasury Secretary Timothy F. Geithner. Treasury now has a cash investment of about $68 billion in AIG. The return on that investment will depend on AIG's stock price, which is up about 89% over the past year, though the price has slumped this week. The shares were off $3.23, or 5.6%, to $53.96 at about 10:50 a.m. PST. The price hit a 52-week high of $61.18 a week ago. In November, the nonpartisan Congressional Budget Office estimated that the government would lose $14 billion of the $48 billion in Troubled Asset Relief Program money it gave to AIG. AIG received federal aid commitments totaling $182 billion in a multi-step bailout engineered by the Treasury and the Federal Reserve beginning in September 2008 when the company was near failure. AIG received about $125 billion in bailout money and has been selling assets to help repay the government. The plan to end its bailout was announced in September. As part of the recapitalization deal that closed Friday, AIG repaid $47 billion it owed to the Federal Reserve Bank of New York, including the final $21 billion of a special $85-billion credit facility extended to the company. "Today, AIG, with the support of countless people, has accomplished a huge goal that many people once thought impossible: completely repaying the Federal Reserve Bank of New York," said AIG Chief Executive Robert H. Benmosche. "Now, we will continue to focus on strong business performance for the benefit of all of our stakeholders, including our largest shareholder, the Treasury Department."
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