ID :
21145
Thu, 09/25/2008 - 16:59
Auther :
Shortlink :
http://m.oananews.org//node/21145
The shortlink copeid
AIG inks definitive pact with Fed for USD85 bn credit facility
New York, Sep 24 (PTI) Beleaguered insurance major
American International Group has inked a definitive agreement
with the US Federal Reserve to avail the credit facility worth
U.S.D. 85 billion as part of the bailout package for the
insurer.
Following the deal, the central bank would take a 79.9
percent stake in the insurance giant.
On September 16, the U.S. Federal Reserve had announced
the two-year revolving credit facility to rescue A.I.G. from a
virtual collapse in a tumultuous financial market.
A.I.G. has to repay the loan by way of the proceeds of
certain asset sales and issuance of debt or equity securities,
among others.
"These mandatory repayments permanently reduce the amount
available to be borrowed under the facility," the company said
in a statement on Tuesday.
Commenting on the definitive agreement with the Federal
Reserve, A.I.G. Chairman and Chief Executive Edward M. Liddy
said that the "facility was the company's best alternative".
"We are pleased to have finalised the terms of the
facility, and are already developing a plan to sell assets,
repay the facility and emerge as a smaller but profitable
company. Importantly, A.I.Gs. insurance subsidiaries remain
strong, liquid and well-capitalised," he pointed out.
Liddy also noted that exhaustive efforts were made to
address the company's liquidity needs through private sector
financing but could not succeed in the "current environment."
According to the agreement terms, there would be an
interest at a rate based on three-month LIBOR in addition to
8.50 percent. There would be an initial gross commitment fee
of 2 percent on the total facility.
A.I.G. would also pay a commitment fee on undrawn amounts
at the rate of 8.50 percent per annum. The interest and
commitment fees would be added to the outstanding balance
amount.
The revolving credit facility would be secured by a pledge
of the capital stock and assets of certain of A.I.G.'s arms.
However, there would be exclusions for certain property, the
pledge of which is not permitted by A.I.G. debt instruments,
as well as exclusions of assets of regulated subsidiaries,
assets of foreign subsidiaries and assets of special purpose
vehicles, the statement added. PTI RAM
American International Group has inked a definitive agreement
with the US Federal Reserve to avail the credit facility worth
U.S.D. 85 billion as part of the bailout package for the
insurer.
Following the deal, the central bank would take a 79.9
percent stake in the insurance giant.
On September 16, the U.S. Federal Reserve had announced
the two-year revolving credit facility to rescue A.I.G. from a
virtual collapse in a tumultuous financial market.
A.I.G. has to repay the loan by way of the proceeds of
certain asset sales and issuance of debt or equity securities,
among others.
"These mandatory repayments permanently reduce the amount
available to be borrowed under the facility," the company said
in a statement on Tuesday.
Commenting on the definitive agreement with the Federal
Reserve, A.I.G. Chairman and Chief Executive Edward M. Liddy
said that the "facility was the company's best alternative".
"We are pleased to have finalised the terms of the
facility, and are already developing a plan to sell assets,
repay the facility and emerge as a smaller but profitable
company. Importantly, A.I.Gs. insurance subsidiaries remain
strong, liquid and well-capitalised," he pointed out.
Liddy also noted that exhaustive efforts were made to
address the company's liquidity needs through private sector
financing but could not succeed in the "current environment."
According to the agreement terms, there would be an
interest at a rate based on three-month LIBOR in addition to
8.50 percent. There would be an initial gross commitment fee
of 2 percent on the total facility.
A.I.G. would also pay a commitment fee on undrawn amounts
at the rate of 8.50 percent per annum. The interest and
commitment fees would be added to the outstanding balance
amount.
The revolving credit facility would be secured by a pledge
of the capital stock and assets of certain of A.I.G.'s arms.
However, there would be exclusions for certain property, the
pledge of which is not permitted by A.I.G. debt instruments,
as well as exclusions of assets of regulated subsidiaries,
assets of foreign subsidiaries and assets of special purpose
vehicles, the statement added. PTI RAM
