New Issue: AIG $1 billion (proceeds) convertibles at 1.4% yield, up 31%

By Ronda Fears

Nashville, Tenn., Nov. 7 - American International Group Inc. sold $1 billion in proceeds of 30-year zero-coupon convertible senior notes at 65.801 with a yield to maturity of 1.4% and a 31% initial conversion premium. Morgan Stanley was sole lead manager of the quick-sale registered deal.

AIG is the leading U.S.-based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the U.S. The New York-based firm plans to use proceeds for general corporate purposes, including debt repayment, working capital, capital expenditures and acquisitions.

Terms of the new deal are:

Issuer: American International Group Inc.

Amount: $1 billion (proceeds), $1.52 billion (face)

Greenshoe: $150 million (proceeds), $228 million (face)

Lead Manager: Morgan Stanley

Maturity Date: Nov. 9, 2031

Coupon: 0%

Issue Price: 65.801

Yield-to-maturity: 1.4%

Conversion Premium: 31%

Conversion Price: $108.53

Conversion Ratio: 6.0627

Call: non-callable for five years

Put: in years five, 10, 15, 20 and 25

Settlement Date: Nov. 13

End

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