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AIG to fully repay U.S. government

By Charles Riley, staff reporter

NEW YORK (CNNMoney) -- American International Group, which received a massive bailout in 2008, said Wednesday that it expects to complete a recapitalization by the end of the week that will allow it to fully pay back the government.

Following through on a plan announced last year, AIG (AIG, Fortune 500) will convert outstanding preferred shares acquired by the Treasury into common stock. When the transaction is complete, the Treasury will own approximately 92% of AIG's common shares.

The company said Wednesday that it expects Treasury will sell its shares of common stock over time, repaying the debt.

"With today's announcement, we anticipate that we will be able to deliver on our promise to the American people to repay the extraordinary assistance they provided to AIG during the financial crisis of 2008," Robert Benmosche, AIG President and CEO, said in a statement.

In addition, AIG said it will repay the Federal Reserve Bank of New York $21 billion to cover the loans made by that branch of the central bank. That payment comes from applying proceeds from various asset sales, the latest of which came on Wednesday when AIG unloaded its Taiwan unit for $2.16 billion in cash.

Benmosche also thanked the American people for their support.

"We remain grateful for their support of AIG, and we remain convinced that the American people will realize a profit on their investment in our company," he said.

Investors who stuck by the company through the recession will also be rewarded as part of the recapitalization.

AIG plans to issue 75 million "warrants" next week that will allow current shareholders to purchase common stock at price of $45.00, a 23% discount from its Wednesday close of $58.40. To top of page

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