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The Key Takeaway from the AIG 8-K

The key takeaway from the AIG 8-K is that this is not a stake sale. AIG is repaying a $20 billion credit facility to the government. They are getting the money from a sale the sale of an IPO of 67 percent of AIA Group and the sale of American Life Insurance company (ALICO), which closed on October 29, 2010 and November 1, 2010, respectively. The total proceeds from these two sales totals $27 billion.

Next, the government will engage in a share exchange with AIG, essentially swapping the governments Preferred Stock for 1.655 billion shares of AIG common stock, representing 92.1 percent of AIG's common stock outstanding.

And when will the Treasury Department sell its 92 percent stake? Doesn't say, but the Treasury has all the registration rights. They can demand that AIG hold up to two offerings of common stock a year.

Separately, AIG will have the right to raise up to $3 billion (and up to an additional $4 billion with the consent of the Treasury Department) by August 15, 2011 in a registered primary offering.

Until the Treasury Department's ownership of AIG's voting securities falls below 33 percent, the Treasury Department will have complete control over the terms, conditions and pricing of any offering in which it participates.

(Full story: Treasury to Cut AIG Stake in Large Stock Sale)

Note that the 8-K filing of today is a formal legal document of the recapitalization that was detailed on Sept. 30, and which was reported by CNBC's Mary Thompson and others at that time.

It adds a few details, such as the fact that AIG will have the right to raise up to $3 billion (and up to an additional $4 billion with the consent of the Treasury Department) by August 15, 2011 in a registered primary offering.

AIG did not comment on media stories that there may be share sales in the spring.

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