AIG tenders for $1.5 billion of multiple junior, senior note series

By Susanna Moon

Chicago, June 12 – American International Group, Inc. said it began a cash tender offer for multiple series of junior subordinated debentures and a cash tender offer for multiple series of senior notes and debentures.

In the junior notes offer, the aggregate principal amount of junior notes AIG may purchase will be limited to $1 billion plus (b) the difference between $500 million and the purchase price of the senior notes AIG purchases in the senior notes offer if the purchase price is less than $500 million, according to a company press release.

In the senior notes offer, the aggregate principal amount of senior notes AIG may purchase will be limited to $500 million plus (b) the difference between $1 billion and the purchase price of the junior notes AIG purchases in the junior notes offer if the purchase price is less than $1 billion.

The early tender deadline is 5 p.m. ET on June 25, and the offers will end at 11:59 p.m. ET on July 10, with settlement set for July 14.

Pricing for the offers will be set using the yield to maturity of the reference security plus a fixed spread at 2 p.m. ET on the early participation date for the dollar-denominated notes or 9 a.m. ET on that day for sterling- or euro-denominated notes.

In the first offer, the hypothetical total purchase price was based on a reference security plus a fixed spread for the junior notes as follows:

• AIG’s £244 million 5.75% series A-2 junior subordinated debentures based on 1.75% U.K. Treasury stock due Jan. 22, 2017 plus a fixed spread of 250 basis points for hypothetical total purchase price of £1,053.35;

• AIG’s €127 million 8% series A-7 junior subordinated debentures based on 4% German Bunds due Jan. 4, 2018 plus 185 bps for hypothetical total purchase price of €1,219.84;

• AIG’s £138.2 million 8.625% series A-8 junior subordinated debentures based on 5% UK Treasury due March 7, 2018 plus 150 bps for hypothetical total purchase price of £1,201.66

• AIG Life Holdings, Inc.’s $280.7 million 8½% junior subordinated debentures due 2030 based on 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 185 bps for hypothetical total purchase price of $1,340.36;

• AIG’s $608.7 million 6.25% series A-1 junior subordinated debentures based on 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 188 bps for hypothetical total purchase price of $1,118.58;

• AIG’s $3,632,600,000 8.175% series A-6 junior subordinated debentures based on 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 188 bps hypothetical total purchase price of $1,379.44;

• AIG Life’s $272.3 million 7.57% junior subordinated deferrable interest debentures, series A, based on 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 198 bps hypothetical total purchase price of $1,318.61; and

• AIG Life’s $445 million 8 1/8% junior subordinated deferrable interest debentures, series B based on 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 203 bps hypothetical total purchase price of $1,393.29.

Senior notes offer

In the senior notes offer, the hypothetical total purchase price was based on a reference security plus a fixed spread for the senior notes, listed in order of priority acceptance level, as follows:

• SunAmerica Inc.’s $100 million 8 1/8% debentures due April 28, 2023 based on 2.5% U.S. Treasury bonds due May 15, 2024 plus 140 bps hypothetical total purchase price of $1,299.77;

• AIG’s £662.2 million 6.765% sterling notes due Nov. 15, 2017 based on 1.75% U.K. Treasury stock due Jan. 22, 2017 plus 110 bps hypothetical total purchase price of £1,144.88;

• AIG’s €160.9 million 6.797% euro notes due Nov. 15, 2017 based on 0.5% German Bunds due April 7, 2017 plus 85 bps hypothetical total purchase price of €1,191.24;

• AIG Life’s $150 million 7½% notes due 2025 based on 2.5% U.S. Treasury bonds due May 15, 2024 plus 118 bps hypothetical total purchase price of $1,328.28;

• AIG’s $1.5 billion 6.4% notes due 2020 based on 1.5% U.S. Treasury notes due May 31, 2019 plus 115 bps hypothetical total purchase price of $1,207.34;

• AIG Life’s $150 million 6 5/8% notes due 2029 based on 2.5% U.S. Treasury bonds due May 15, 2024 plus 168 bps hypothetical total purchase price of $1,247.71;

• AIG’s $2.5 billion 5.85% medium-term notes, series G, due Jan. 16, 2018 based on 1.5% U.S. Treasury notes due May 31, 2019 plus 10 bps hypothetical total purchase price of $1,137.25;

• AIG’s $256.2 million 6.82% dollar notes due Nov. 15, 2037 based on 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 95 bps hypothetical total purchase price of $1,348.76; and

• AIG’s $750 million 5.6% medium-term notes, series G, due Oct. 18, 2016 based on 0.375% U.S. Treasury notes due May 31, 2016 plus 70 bps hypothetical total purchase price of $1,099.57.

More offer terms

The total purchase price includes an early premium of $50, £50 or €50 for each respective $1,000, £1,000 or €1,000 principal amount of notes tendered by the early participation date.

The hypothetical total purchase price for each series was set using the yield to maturity of the reference security at 2 p.m. ET on June 11 for the dollar-denominated notes or 9 a.m. ET on that day for sterling- or euro-denominated notes.

Those who tender after the early tender date will receive the total amount less the early premium.

The company also will pay accrued interest to but excluding the payment date.

Tendered notes may be withdrawn by 5 p.m. ET on June 25.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106 collect), Credit Suisse Securities (USA) LLC (800 820-1653 or 212 538-2147 collect), J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811 collect), J.P. Morgan Securities plc (+44 20 7134 3414 collect) and Wells Fargo Securities, LLC (866 309-6316 or 704 410-4760 collect) are the joint lead dealer managers; ANZ Securities, Inc., Mizuho Securities USA Inc., Santander Investment Securities Inc., SMBC Nikko Securities America, Inc. and Standard Chartered Bank are the co-dealer managers; and ING Financial Markets LLC, Natixis Securities Americas LLC, PNC Capital Markets LLC, Samuel A. Ramirez & Co., Inc., Sandler O’Neill & Partners, LP and Williams Capital Group, LP are the junior co-dealer managers. Global Bondholder Services Corp. (212 430-3774 for banks and brokers only, 866 470-3800 or +001 212 430-3774 international, by email at aig@gbsc-usa.com and online at gbsc-usa.com/aig) is the information agent and depositary.

The insurance company is based in New York City.

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