Bloomberg News

AIG Says Warrants Didn’t Qualify as Tax-Free Distribution

December 29, 2011

(Updates with warrant description in the third paragraph.)

Dec. 29 (Bloomberg) -- American International Group Inc., the insurer bailed out by the U.S. government, said 75 million warrants issued last January didn’t qualify as a tax-free distribution.

AIG said it still expects the distribution won’t be taxable, “except to the extent that a holder’s adjusted tax basis in each common share on which the warrants were distributed is less than $8.70,” according to a statement today from the New York-based company.

AIG’s private shareholders received warrants to buy stock at $45 a share as Chief Executive Officer Robert Benmosche moved to reduce the government’s majority stake. The insurer, once the world’s biggest, declined 52 percent this year through yesterday to $22.97. The shares rose 18 cents as of 9:58 a.m. in New York.

Investors received the 10-year warrants as part of a series of transactions designed to recapitalize the company, according to AIG’s web site.

--Editors: Rick Green, William Ahearn

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net

To contact the editor responsible for this story: Rick Green in New York at rgreen18@bloomberg.net


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