By Rebecca Melvin
New York, May 13 - American International Group Inc. priced $5.4 billion of three-year mandatory convertible equity units at $75 per unit to yield a coupon of 8.5% and an initial conversion premium of 20%, according to a syndicate source.
Concurrently AIG priced $6.5 billion of common stock at $38 per share.
Together the offerings totaled $11.9 billion of capital that AIG raised, which was upsized from the previously announced $7.5 billion.
The mandatories priced at the cheap end of talk for the coupon, which was 8% to 8.5%, and at the midpoint of talk for the initial conversion premium, which was 18% to 22%.
Citigroup and J.P. Morgan Securities Inc. are joint bookrunners of the equity units, with Banc of America Securities LLC, Merrill Lynch, Morgan Stanley, UBS and Wachovia acting as co-managers.
The underwriters were granted a 13-day option to purchase up to an additional 6.4 million equity units to cover over-allotments.
The units will be non-callable, with maturities staggered in 2011, starting with a one-third tranche maturing Feb. 15, a second one-third tranche maturing May 1 and a third one-third maturing Aug. 1.
The units have dividend protection via a conversion ratio adjustment and make-whole change-of-control protection.
AIG intends to use proceeds for general corporate purposes.
New York-based AIG is a provider of insurance and financial services.
AIG has applied to list the equity units on the New York Stock Exchange under the symbol AIG-PrA.
| Issuer: | American International Group Inc.
|
| Issue: | Mandatory convertible equity units
|
| Amount: | $5.4 billion
|
| Greenshoe: | 6.4 million equity units
|
| Concurrent offering: | $6.5 billion common shares, for a combined $11.9 billion, upsized from $7.5 billion
|
| Bookrunners: | Citigroup and J.P. Morgan Securities Inc.
|
| Co-managers: | Banc of America Securities LLC, Merrill Lynch, Morgan Stanley, UBS and Wachovia
|
| Maturity: | May 17, 2011 (average)
|
| Coupon: | 8.5%
|
| Price: | Par of $75 per unit
|
| Conversion price: | $45.60
|
| Conversion premium: | 20%
|
| Minimum conversion rate: | 1.6447
|
| Maximum conversion rate: | 1.9737
|
| Calls: | Non-callable
|
| Pricing date: | May 12
|
| Settlement date: | May 16
|
| Distribution: | Shelf registration
|
| Price talk: | 8%-8.5%, up 18%-22%
|
| Stock symbol: | NYSE: AIG
|
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