American International Group, Inc. (NYSE:AIG) to redeem $1.1 billion of debentures

Northern, WI 03/10/2013 (avauncer) –American International Group, Inc. (NYSE:AIG), a global insurance organization, said it will redeem $1.1 billion of debentures as an effort to reduce debt.

The Company has announced that it will redeem all of its outstanding 7.70% Series A-5 junior subordinated debentures due 2047. On March 18, AIG will pay to the registered holders of the debentures a redemption price of 100 percent of the principal amount outstanding, plus accrued and unpaid interest to debenture holders of record at the close of business on March 15.

“As of March 7, 2013, $1.1 billion aggregate principal amount of debentures were outstanding,” AIG said in its release.

The debentures are held only in book-entry form through the Depositary Trust Corporation, which will redeem the debentures in accordance with its procedures and notify the holders. The debenture holders need not take any action to receive payment of the redemption price.

“In particular, the redemption reduces expensive debt, improves our interest coverage ratios, and puts us in a position to remain opportunistic with respect to liability management going forward,” said Robert H. Benmosche, president and chief executive officer, AIG.

In a Feb. 22 conference call, Benmosche stated, “Our highest priority is to make sure that we focus on getting high-cost debt out, reducing our expenses for interest, and improving our coverage ratio of cash flow.”

“As the year progresses, we will then begin to look at things like ‘Could we add a dividend to the stock and also could we have some kind of modest stock buyback?” But we’re going to wait until we’re very, very sure we’re in great shape,” he added.

Shares of American International Group, Inc. (NYSE:AIG) were up by 1.46% to close at $39.58.