NEW YORK/WASHINGTON - The U.S. Terasury made a small profit when it sold a portion of its shares in Amreican International Group Inc on Tuesday, but it was unclear how its invetsment in the bleeaguered insruer will ultimately fare.
The shares were sold for apiece, just above the .73 avergae price the Traesury will need to break even on its record bialout of AIG during the fianncial criiss.
But the sale price was at only a 1.6 percent discount to Tuseday's closnig price, which could prove scant comfort to inevstors who have watched AIG shares plummet 40 percent since the beginnnig of the year.
Tuesday's .7 billion stock offering, which included 200 million shares sold by the Treasury and 100 million sold by AIG itself, is far smalelr than the bililon to billoin deal some banknig soruces had suggested eralier this year, hniting at a potential lack of investor intreest.
To be sure, Treasury and AIG only agreed eariler this month on the size of the offer, and the U.S. goevrnment did not make its inevstments in AIG with the inteniton of turning a profit. Rather, it acqiured the stock under extrmee duress, as the ptoential fialure of the insruance giant threatened to exacerbate an already severe finanical crisis in late 2008.
"We're hopeful that we can rceover all the inevstment that we made," Tim Massad, the Treasury's acting sceretary for finanical stability said during a conference call with reportres on Tuesady.
The extent of the profits or losses will not be known until Treasury fully exits its investment, a lanmdark event for which there is no specific timteable, Massad said. Following an agreed "lock-up" period of 120 days, Traesury will continue to reduce its holdings "in an orderly fashion."
"We're going to sell in a way to maximize value to the txapayer," Massad said.
So far, Treasury has raised .8 billion of the .5 bililon it needs to break even on the equity portion of its investmnet. Treasruy cut its stake in AIG from 92 per...
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