NEW YORK (Reuters) – Major shareholders of American International Group Inc are trying to help pay off a hefty federal loan before the government can take a 79.9 percent stake in the insurer, which would heavily dilute their shares, the Wall Street Journal reported.
AIG, which was on the verge of collapse as it struggled with fallout from the subprime mortgage crisis, was bailed out by the federal government this week with a $85 billion credit facility that will require it to sell assets to repay the debt.
In its online edition Friday, the Journal reported that hurdles to the shareholders’ efforts could be high as it would require raising significant sums. The report did not identify the shareholders, and cited an unidentified person familiar with the situation.
The report said funds could be raised through various means, including asset sales or possible investments in AIG.
An AIG spokesman did not have an immediate comment, and a spokesman for AIG’s largest individual shareholder, former CEO Maurice Greenberg, declined to comment.
In June, a group of dissident shareholders fought for changes to the insurer’s management and board, leading to then -chief executive Martin Sullivan being replaced by Chairman Robert Willumstad.
In the wake of the federal bailout, Willumstad, only three months into the job, was replaced by industry veteran Edward Liddy.
Investors involved in the June revolt included former director Eli Broad and fund managers Shelby Davis of Davis Selected Advisers LP and Bill Miller of Legg Mason Inc
None of the investors were immediately available for comment.
AIG shares rose $1.21 to $3.90 on the New York Stock Exchange, following the broader market.
(Reporting by Lilla Zuill, additional reporting by Robert Macmillan, Muralikumar Anantharaman; editing by Jeffrey Benkoe)