AIG Filing Confirms Use Of Covenants

"Libor," the London Interbank Offered Rate, is a benchmark banks use to set rates when lending one another money.

"The revolving credit facility has a 24-month term and is secured by a pledge of all of the assets of AIG and its Material Subsidiaries," AIG says in the filing.

"The revolving credit facility contains affirmative and negative covenants, including a covenant to pay down the facility with the proceeds of asset sales by AIG," AIG says.

"In connection with the revolving credit facility, AIG issued a warrant to the Board of Governors of the Federal Reserve … that permits the Federal Reserve, subject to shareholder approval, to obtain up to 79.9% of the outstanding common stock of AIG (after taking into account the exercise of the warrant)," AIG says. "AIG anticipates calling a special meeting for such purpose as promptly as practicable."

In theory, if AIG operations and stock recovered enough before the AIG shareholders voted on the deal, or AIG could line up private financing to replace the Fed credit facility offer, it appears that shareholders might be able to reject the credit facility offer and avoid letting the Fed take a 79.9% stake in AIG.