The Work

March 8, 2012 5:24 PM

Three Am Law Firms Advise on Treasury's $6 Billion Sale of AIG Shares

Posted by Tom Huddleston Jr.

UPDATE: 3/9/12, 11:18 a.m. EST, A Debevoise & Plimpton team led by corporate partners E. Drew Dutton and Peter Loughran is advising AIG in connection with the sale, referenced in this story's second paragraph, of shares in Hong Kong's AIA Group Limited.

The U.S. Department of the Treasury said Thursday that it will sell about $6 billion of its stake in American International Group in the latest step toward recouping the $182 billion the federal government pumped into the faltering insurance giant as the financial crisis began to explode in 2008.

The Treasury Department said it will sell AIG common stock for $29 a share, with AIG agreeing to purchase $3 billion worth of stock. AIG has also agreed to repay a separate $8.5 billion government investment with the proceeds from recent asset sales, including this week's sale of AIG insurance interests in Asia for roughly $6 billion, the company said Wednesday (PDF).

The share sale is part of Treasury's plan to exit stakes in companies it acquired as part of the financial bailout. Once the sale is complete, the government will reduce its stake in AIG to $47.1 billion, or roughly 70 percent of the company.

Davis Polk & Wardwell is advising Treasury on the matter, with a team that includes capital markets partner John Brandow, M&A partners John Knight and William Chudd, credit partner Bjorn Bjerke, and tax partner Kathleen Ferrell.

An SEC filing shows that AIG is relying on Sullivan & Cromwell as legal counsel, along with the company's deputy general counsel, Kathleen Shannon. 

As The Am Law has previously reported, the two firms took lead roles in crafting provisions of the AIG bailout. We reported last May that S&C advised AIG and Davis Polk represented Treasury in a public sale of AIG shares that raised about $8.7 billion for the government.

Cleary Gottlieb Steen & Hamilton—which advised underwriters led by Bank of America/Merrill Lynch, Deutsche Bank Securities, Goldman Sachs, and JPMorgan Securities in that offering—is reprising that role in the current share sale for a group of underwriters led by Citigroup Global Markets, Credit Suisse Securities, and Morgan Stanley. Under the agreement announced Thursday, those underwriters will have the option of purchasing an additional $900 million of AIG stock.

The Cleary team is being led by capital markets partner Craig Brod and financial institutions partner Jeffrey Karpf. Financial institutions counsel Helena Grannis also is advising.

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