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Treasury to Sell $5 Billion in AIG Stock

Tickers in this article: AIG

NEW YORK (TheStreet) -- AIG(JPM) took another step toward independence from U.S. government ownership on Sunday as the U.S. Treasury announced it would sell some $5 billion worth of AIG shares, with AIG buying $2 billion of that total.

The transaction reduces the Treasury's stake in AIG to 63%, or $30.7 billion, according to the Treasury's announcement. That stake may be reduced by up to an additional $740 million if underwriters of the Treasury's offering, which include 11 different investment banks, elect to purchase AIG shares from the Treasury.

Total government support to AIG now totals about $39 billion, down from an original $182 billion extended during the financial crisis, according to the Treasury's announcement. The remaining support includes the rest of Treasury's equity investment and a roughly $8 billion loan from the Federal Reserve Bank of New York.

The Treasury's sale and AIG's repurchase will be executed at a price of $30.5 per share, a roughly 7% discount to Friday's closing price of $32.83. AIG shares were hovering right at the $30.5 mark in pre-market trading on Monday. They are up more than 40% year to date, but lost 3.84% Friday following the release of first quarter earnings that beat analyst estimates.

-- Written by Dan Freed in New York.

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