American International Group Inc. has closed on two transactions that reduce the amount it owes to the Federal Reserve Bank of New York to $17 billion, from $42 billion.
AIG, New York, (NYSE:AIG) today announced that it has completed previously announced plans to reduce its debt to the New York Fed by $25 billion by giving the New York Fed preferred equity interests in newly formed subsidiaries.
The transactions will help AIG wait until the time is right to sell its American International Assurance Company Ltd. and American Life Insurance Company subsidiaries, AIG says.
AIG is using the AIA and ALICO transactions to cut the balance owed on a New York Fed credit facility.
As a result of the transactions, the total amount available under the facility has been reduced to $35 billion, from $60 billion, AIG says.
After AIG finishes paying off the credit facility debt, the AIG Credit Facility Trust will continue to hold a preferred voting interest in AIG, according to AIG Chairman Robert Benmosche.
The trust now has a 79.8% interest in AIG through the ownership of Series C Preferred Stock.
