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AIG Set to Announce Asset Sale or Capital Injection

By CNBC's Mary Thompson and David Faber
Sunday, 14 Sep 2008 | 5:33 PM ET

American International Group will announce an asset sale or capital injection as soon as tonight, or sometime tomorrow, CNBC has learned.

The insurance giant, which declined comment, is pursuing a three-part plan to raise $50 billion in liquidity. It is trying to raise billions from private equity firms, and is also in talks with Warren Buffett, CNBC has learned.

The Wall Street Journal reports that AIG's CEO Willumstad has turned down offers of a private equity infusion, and instead has asked the Federal Reserve for help.

AIG also is working toward an immediate sale of its airplane leasing operation (ILFC), its domestic auto finance business and more, sources said. It also has apparently received approval to move some capital from its regulated insurance operations to its unregulated business.

All of this is an attempt to create liquidity before markets open Monday in an effort to stem what seems a certain downgrade from ratings agencies, people familiar with the situation said.

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AIG executives have been meeting throughout the weekend with financial advisors, potential liquidity providers and potential purchasers of the firm's assets.

AIG's stock dropped 25 percent on Friday on concerns it will have trouble raising the capital it needs to cover potential losses and to prevent the ratings agencies from cutting its credit rating.

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