By Angela McDaniels
Tacoma, Wash., March 5 - American International Group, Inc. announced the amount of securities tendered so far in its modified Dutch auction tender offers for eight series of securities.
As of the early participation date, holders had tendered $668.7 million, or 10.85%, of the $6,162,600,000 of eligible dollar-denominated securities.
The offers began Feb. 19. The early participation date was 5 p.m. ET on March 4, and the expiration date is 11:59 p.m. ET on March 18.
The following AIG debentures are covered by one offer, and the total purchase price for them will not exceed the equivalent of $408 million, increased from $325 million:
• £527.7 million of 8.625% series A-8 junior subordinated debentures due May 22, 2018; and
• €750 million of 8% series A-7 junior subordinated debentures due May 22, 2018.
As of the early participation date, holders had tendered £442.4 million, or 83.84%, of the sterling debentures and €575.8 million, or 76.77% of the euro debentures.
The following AIG debentures are covered by a second offer, and their total purchase price will not exceed $650 million:
• $687.6 million of 6.25% series A-1 junior subordinated debentures due March 15, 2037; and
• $4 billion of 8.175% series A-6 junior subordinated debentures due May 15, 2038.
As of the early participation date, holders had tendered $78.6 million, or 11.43%, of the series A-1 debentures and $365.8 million, or 9.14%, of the series A-6 debentures.
The following securities are covered by a third offer, and their total purchase price will not exceed $275 million:
• $300 million of 8.5% capital trust passthrough securities issued by AG Capital II with a July 1, 2030 call date;
• $500 million of 7.57% capital securities, series A, issued by AG Institutional Capital A with a Dec. 1, 2045 call date;
• $500 million of 8.125% capital securities, series B, issued by AG Institutional Capital B with a March 15, 2046 call date; and
• $175 million of 5.6% senior debentures due July 31, 2097 issued by SunAmerica.
As of the early participation date, holders had tendered $19.3 million, or 6.44%, of the 8.5% securities, $114.22 million, or 22.83%, of the 7.57% securities, $29.0 million, or 5.8%, of the 8.125% securities and $61.8 million, or 35.29%, of the SunAmerica debentures.
The capital securities were issued by three statutory trusts controlled by SunAmerica Financial Group Inc., a wholly owned subsidiary of AIG, that hold junior subordinated debentures issued by SunAmerica Financial and guaranteed by AIG and senior debentures originally issued by SunAmerica Inc. and assumed by AIG.
If a tender offer is oversubscribed, acceptance of securities is subject to proration.
Hypothetical prices
The company also announced hypothetical purchase prices for the securities based on hypothetical clearing spreads. If no additional tenders are received following the early participation date, the actual clearing spreads will be the same as the hypothetical clearing spreads.
The actual purchase prices will be calculated on the basis of the reference yield plus the actual clearing spreads determined through the modified Dutch auction method.
The reference yield is 3.096% for the dollar-denominated securities, 0.831% for the sterling-denominated securities and 0.377% for the euro-denominated securities. They were set on March 4 using the bid-side price of the 2.75% Treasury due Nov. 15, 2042 for the dollar-denominated securities, the 5% U.K. Gilt Treasury due March 7, 2018 for the sterling-denominated securities and the 4% German Bunds due Jan. 4, 2018 for the euro-denominated securities.
Holders who tendered their securities by the early participation date will receive the total consideration, which will include an early participation amount equal to 5% of par.
The hypothetical total considerations are noted in the table below.
The cash payable to each holder whose securities are accepted for purchase by AIG will include a cash payment representing the accrued interest or distributions on those securities.
The payment date is expected to be March 19 for the dollar-denominated debentures and SunAmerica securities and March 20 for the sterling and euro debentures.
More information
Once the tender offer for the SunAmerica Financial securities is completed, the trusts will be dissolved and the SunAmerica Financial debentures will be distributed to the holders of their capital securities.
Securities purchased in the offer will be canceled.
The tender offers are subject to some conditions, but no tender offer is conditioned on the completion of the others.
The joint lead dealer managers are Credit Suisse Securities (USA) LLC (800 820-1653 or 212 538-2147), J.P. Morgan Securities LLC (866 834-4666 or 212 834-2494) and Morgan Stanley & Co. Inc. (800 624-1808 or 212 761-1057). The co-dealer managers are BNP Paribas, HSBC, RBC Capital Markets and Standard Chartered Bank. The junior co-dealer managers are ANZ Securities, Lloyds Securities, nabSecurities, LLC, Santander, Societe Generale and UniCredit Capital Markets.
The information agent and depositary is Global Bondholder Services Corp. (212 430-3774 for banks and brokers; otherwise, 866 470-4100, +001-212-430-3774, aig@gbsc-usa.com or www.gbsc-usa.com/aig).
AIG is an insurance organization based in New York.
AIG tender offers pricing information
Issue Minimum spread Maximum spread Hypothetical spread Hypothetical price
| 8.625% series A-8 debentures | 225 bps | 275 bps | 238 bps | £1,256.13
|
| 8% series A-7 debentures | 315 bps | 365 bps | 328 bps | €1,201.15
|
| 6.25% series A-1 debentures | 230 bps | 260 bps | 230 bps | $1,114.13
|
| 8.175% series A-6 debentures | 250 bps | 280 bps | 250 bps | $1,345.77
|
| 8.5% passthrough securities | 230 bps | 260 bps | 230 bps | $1,345.91
|
| 7.57% capital securities, series A | 260 bps | 290 bps | 260 bps | $1,276.44
|
| 8.125% capital securities, series B | 265 bps | 295 bps | 265 bps | $1,350.13
|
| 5.6% senior debentures | 255 bps | 285 bps | 255 bps | $991.85
|
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