The transaction values ILFC at $5.28 billion. AIG said that it would "retain at least a 10% ownership stake in ILFC, allowing it to continue to participate in the growth of ILFC's unique franchise, including the benefits that the investor group will bring to the company."
AIG also said that "when the transaction meets the criteria for "held for sale" accounting treatment, AIG expects to record a non-operating loss of approximately US$4.4 billion, which includes a non-cash charge of approximately $1.8 billion associated with the utilization of tax net operating loss carry forwards from this transaction."
Deutsche Bank analyst Joshua Shanker rates AIG a "Buy," and on Monday lowered his price target for the shares by a dollar to $41, while estimating a fourth-quarter loss of 16 cents a share. Shanker lowered his 2012 EPS estimate to $3.77 from $4.10, while lowering his 2013 EPS estimate by a nickel to $3.45.
The analyst said that the company's exposure to Sandy was "higher than we would expect," but that the $5.28 billion valuation for ILFC "seems perhaps above expectations," and that "previously, it was uncertain as to whether an ILFC sale would actually occur."
Shanker said that "the sale of ILFC simplifies the AIG story and is another example of management's success at implementing its plan." The analyst also saw a silver lining in the company's loss estimate, calling it "outsized" relative to peers, and saying that "a lack of gross loss detail could mean that AIG is reserving conservatively by reserving up to its retention, given the uncertainty still inherent from the event, and may result in favorable development in the future."
The U.S. Treasury late on Monday
that it would be selling its remaining stake of 234,169,156 AIG common shares, although the government would continue to hold warrants to purchase common shares that were issued as part of the company's government bailout in 2008 and 2009.
AIG's shares have returned 44% year-to-date. The shares trade for 9.5 times the consensus 2013 EPS estimate of $3.52, among analysts polled by Thomson Reuters.
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Written by Philip van Doorn in Jupiter, Fla.