Major shareholders are pursuing an effort to help pay off the federal government's loan to American International Group Inc. in time to avoid having Washington take an 80% stake in the company, according to a person familiar with the matter.
Hurdles to these shareholders' efforts could be high, as they and other investors they may recruit would have to put up significant sums.
Last week the government agreed to lend AIG up to $85 billion to help it avoid bankruptcy in exchange for a right to take a controlling stake in the giant insurance conglomerate.
The shareholder group wants to make sure the government gets paid back quickly so that it will not need to take the stake, the person said. This could be accomplished through asset sales that the company is planning and possibly through investments in AIG by large investors such as sovereign wealth funds. The approach could be more beneficial to shareholders than the government deal because it would inject capital in exchange for equity. The government, by contrast, would get equity in exchange for its loan.
Edward Liddy, who was named AIG's chief executive last week as part of the arrangement with the government, said he had no knowledge of the shareholder effort and had no comment. AIG's stock price has fallen more than 90% this year, largely because of losses linked to the mortgage market. The government acquisition is subject to shareholder approval.