Newspaper article International Herald Tribune

Chinese Group to Buy A.I.G. Leasing Unit

Newspaper article International Herald Tribune

Chinese Group to Buy A.I.G. Leasing Unit

Article excerpt

American International Group will sell up to 90 percent of its stake in I.L.F.C., in a deal that values the business at $5.28 billion.

American International Group has agreed to sell up to 90 percent of its extensive airplane-leasing unit to a group of Chinese investors in a deal that values the business at about $5.28 billion. It is part of the insurance giant's effort to sell assets that it considers nonessential to its core operations, as the company continues to recover from the financial crisis.

Under the terms of the deal, A.I.G. would sell an 80 percent stake to a group that includes New China Trust., the China Aviation Industrial Fund and P3 Investments. The consortium has the option of buying an additional 9.9 percent stake. If exercised, the move would bring in two additional investors: New China Life Insurance and an arm of Industrial and Commercial Bank of China.

A.I.G. would hold on to at least 10 percent of the business, and the insurer's chief executive, Robert H. Benmosche, would keep a seat on the company's new board.

The deal would be one of the biggest acquisitions of a U.S. company by Chinese investors and is expected to undergo scrutiny by the Committee on Foreign Investment, the U.S. government body that reviews the national security implications of deals involving foreign buyers. The deal is also subject to other U.S. and Chinese regulatory reviews.

The transaction is yet another asset sale by A.I.G. as it continues to sell off nonessential businesses, largely to help pay back its taxpayer-financed rescue. Since its government bailout in the autumn of 2008, it has disposed of major units like AIA, a big Asian life insurance operation, and American Life Insurance, another large international operation.

A.I.G. said it expected to eventually record a loss of about $4.4 billion on the sale, including an accounting charge of about $1.8 billion tied to the use of tax assets in the deal. International Lease Finance Corp., or I.L.F.C. as the division is commonly known, is one of the biggest in the world and has long been regarded as one of A.I.G.'s crown jewels. …

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