American International Group Inc. says it will be using $40 billion in Troubled Assets Relief Program cash to restructure some of its debt.
The U.S. Treasury Department today used TARP funding to pay $40 billion for 4 million shares of AIG Series D preferred stock, according to AIG, New York.
The preferred shares are set to pay a 10% annual dividend.
Treasury also is getting a warrant with a term of 10 years that gives it the ability to buy up to 54 million shares of AIG common stock. The exercise value would be the par value of AIG common stock at the time the warrant is exercised, AIG says.
If Treasury exercised the warrant today, the exercise price would be $2.50, according to a report on the transaction that AIG has filed with the U.S. Securities and Exchange Commission.