AIG prices tender for multiple note series, lifts cap; offers oversubscribed by early date

By Susanna Moon

Chicago, June 26 – American International Group, Inc. announced the early tender results and set pricing in the offer for multiple series of junior subordinated debentures and multiple series of senior notes and debentures.

AIG also lifted the tender offer cap in the tender offers, revising the maximum aggregate purchase price for notes purchased in the junior tender offer to $1.8 billion and the maximum aggregate purchase price for notes purchased in the senior tender offer to $700 million, according to a company press release.

The company previously had planned to spend up to $1.5 billion, excluding accrued interest, on the tender offers.

As the tender offers were oversubscribed, AIG will accept all junior notes tendered on a prorated basis. If no additional notes are tendered after the early deadline, AIG said it will accept all senior notes tendered with priority levels 1 through 4, and the senior notes tendered with priority level of 5 will be accepted on a prorated basis.

No senior notes with priority levels of 6 to 9 will be accepted by AIG, the company noted.

Pricing set for offers

Pricing for the offers were set using fixed spreads over the yields to maturity of reference securities as of 2 p.m. ET on June 25 for dollar-denominated notes and 9 a.m. ET on June 25 for sterling- or euro-denominated notes.

AIG said on June 25 that it set the reference yields used to determine pricing for its tender offer for multiple series of junior subordinated debentures and its tender offer for multiple series of senior notes and debentures.

The total purchase price for each $1,000, £1,000 or €1,000 principal amount of notes tendered by 5 p.m. ET on June 25, the early tender date, includes a 5% early participation amount.

Holders will also receive accrued interest up to but excluding the payment date of July 14.

Junior subordinated debentures

For the junior offer, the purchase prices per £1,000, €1,000 or $1,000 principal amount of notes were set as follows:

• £1,051.34 for AIG’s £244 million 5.75% series A-2 junior subordinated debentures based on the 1.211% yield of the 1.75% U.K. Treasury stock due Jan. 22, 2017 plus 250 basis points;

• €1,222.53 for AIG’s €127 million 8% series A-7 junior subordinated debentures based on the 0.099% yield of the 4% German Bunds due Jan. 4, 2018 plus 185 bps;

• £1,199.16 for AIG’s £138.2 million 8.625% series A-8 junior subordinated debentures based on the 1.603% yield of the 5% U.K. Treasury stock due March 7, 2018 plus 150 bps;

• $1,351.11 for AIG Life Holdings, Inc.’s $280.7 million 8.5% junior subordinated debentures due 2030 based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 185 bps;

• $1,130.26 for AIG’s $608.7 million 6.25% series A-1 junior subordinated debentures based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 188 bps;

• $1,393.48 for AIG’s $3,632,600,000 8.175% series A-6 junior subordinated debentures based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 188 bps;

• $1,334 for AIG Life’s $272.3 million 7.57% junior subordinated deferrable interest debentures, series A, based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 198 bps; and

• $1,409.38 for AIG Life’s $445 million 8.125% junior subordinated deferrable interest debentures, series B, based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 203 bps.

Junior offer early tenders

As of the early tender date, investors had tendered the following amount of notes:

• £78.35 million, or 32.11%, of 5.75% series A-2 junior subordinated debentures;

• €76.85 million, or 60.51%, of 8% series A-7 junior subordinated debentures;

• £60.25 million, or 43.6%, of 8.625% series A-8 junior subordinated debentures;

• $31.88 million, or 11.36%, of 8.5% junior subordinated debentures due 2030;

• $126,945,000, or 20.86%, of 6.25% series A-1 junior subordinated debentures;

• $870,359,000, or 23.96%, of 8.175% series A-6 junior subordinated debentures;

• $77.96 million, or 28.63%, of 7.57% junior subordinated deferrable interest debentures; and

• $42,365,000, or 9.52%, of 8.125% junior subordinated deferrable interest debentures.

Senior offer pricing

For the senior offer, the purchase prices per £1,000, €1,000 or $1,000 principal amount of notes were set as follows:

• $1,306.00 for SunAmerica Inc.’s $100 million 8.125% debentures due April 28, 2023 based on the 2.566% yield of the 2.5% U.S. Treasury bonds due May 15, 2024 plus 140 bps;

• £1,142.21 for AIG’s £662.2 million 6.765% sterling notes due Nov. 15, 2017 based on the 1.211% yield of the 1.75% U.K. Treasury stock due Jan. 22, 2017 plus 110 bps;

• €1,192.87 for AIG’s €160.9 million 6.797% euro notes due Nov. 15, 2017 based on the 0.056% yield of the 0.5% German Bunds due April 7, 2017 plus 85 bps;

• $1,335.97 for AIG Life’s $150 million 7.5% notes due 2025 based on the 2.566% yield of the 2.5% U.S. Treasury bonds due May 15, 2024 plus 118 bps;

• $1,209.69 for AIG’s $1.5 billion 6.4% notes due 2020 based on the 1.657% yield of the 1.5% U.S. Treasury notes due May 31, 2019 plus 115 bps;

• $1,256.67 for AIG Life’s $150 million 6.625% notes due 2029 based on the 2.566% yield of the 2.5% U.S. Treasury bonds due May 15, 2024 plus 168 bps;

• $1,138.56 for AIG’s $2.5 billion 5.85% medium-term notes, series G, due Jan. 16, 2018 based on the 1.657% yield of the 1.5% U.S. Treasury notes due May 31, 2019 plus 10 bps;

• $1,363.54 for AIG’s $256.2 million 6.82% dollar notes due Nov. 15, 2037 based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 95 bps; and

• $1,099.07 for AIG’s $750 million 5.6% medium-term notes, series G, due Oct. 18, 2016 based on the 0.448% yield of the 0.375% U.S. Treasury notes due May 31, 2016 plus 70 bps.

The senior notes are listed in order of priority acceptance level.

Senior offer tender results

Investors had tendered the following amounts by the early tender date:

• $13.61 million, or 13.61%, of 8.125% debentures due April 28, 2023;

• £123,443,000, or 18.64%, of 6.765% sterling notes due Nov. 15, 2017;

• €98,432,000, or 61.18%, of 6.797% euro notes due Nov. 15, 2017;

• $14,404,000, or 9.6%, of 7.5% notes due 2025;

• $350,197,000, or 23.35%, of 6.4% notes due 2020;

• $17,227,000, or 11.48%, of 6.625% notes due 2029;

• $322,637,000, or 12.91%, of 5.85% medium-term notes, series G, due Jan. 16, 2018;

• $168,758,000, or 65.87%, of 6.82% dollar notes due Nov. 15, 2037; and

• $56,005,000, or 7.47%, of 5.6% medium-term notes, series G, due Oct. 18, 2016.

More offer details

The offers will continue until 11:59 p.m. ET on July 10.

The joint lead dealer managers are Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106), Credit Suisse Securities (USA) LLC (800 820-1653 or 212 538-2147), J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811), J.P. Morgan Securities plc (+44 20 7134 3414) and Wells Fargo Securities, LLC (866 309-6316 or 704 410-4760).

The co-dealer managers are ANZ Securities, Inc., Mizuho Securities USA Inc., Santander Investment Securities Inc., SMBC Nikko Securities America, Inc. and Standard Chartered Bank.

The junior co-dealer managers are 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.

The information agent and depositary is 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).

Originally, AIG planned to purchase a principal amount of junior debt equal to (a) $1 billion plus (b) the difference between $500 million and the aggregate purchase price of the senior debt purchased if that purchase price is less than $500 million.

The principal amount of senior debt securities AIG planned to purchase originally was limited to the amount AIG can purchase for (a) $500 million plus (b) the difference between $1 billion and the aggregate purchase price of the junior debt securities AIG purchases if that purchase price is less than $1 billion.

The insurance company is based in New York City.

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