AIG borrows yet another $40 billion

[DavidS]

the New York insurer, closed its $40 billion stock placement with the U.S. Treasury under the government's Troubled Assets Relief Program, the company said late on Tuesday. The Treasury bought 4 million shares of AIG Series D preferred and a warrant to buy common stock equaling 2% of the company on the date of the investment. The preferred pays 10% annual interest. The 10-year warrant is exercisable for as many as 53.8 million common shares; the price equals the common stock's par value when the warrant is exercised. AIG said it would use the proceeds to reduce its borrowings outstanding under the credit agreement the Federal Reserve Bank of New York extended to the insurer in September. The maximum capacity of that credit agreement will be reduced to $60 billion from $85 billion, AIG said.

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