September 23, 2009 / 4:16 PM / in 8 years

UPDATE 1-US may cut stake in AIG via shr offering: Credit Suisse

Sept 23 (Reuters) - Credit Suisse said the trustees overseeing the U.S. government’s stake in American International Group Inc (AIG.N) may execute a large scale secondary offering to lower its common equity interest in the company.

Analyst Thomas Gallagher said the trustees may execute a secondary offering through some type of trading mechanism such as an “at-the-market” offering or a discounted sale to a private investor.

The government could effect a stock swap of AIG’s preferred shares for its common equity if the U.S. Treasury is able to reduce its equity interest via a secondary offering or sale of shares, Gallagher said in a note to clients.

“While this would further dilute current common shareholders, we see it as perhaps the best course of action given the primary objective of maintaining ratings and right-sizing AIG’s capital structure,” the analyst, who has a “underperform” rating and a price target of $15 on AIG stock, added.

    AIG’s shares were up 3 percent at $47.11 in Wednesday morning trade on the New York Stock Exchange. (Reporting by Brenton Cordeiro in Bangalore; Editing by Pradeep Kurup)

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