"Based on our brief discussion with [management], we understand AIG has in fact been in contact with the buyer group, but beyond that we do not know in which direction things are headed," wrote Sterne Agee analyst John Nagel in a note to clients on Friday. During the company's earning conference call on May 3, AIG CEO Robert Benmosche said "the ILFC divestiture continues through the regulatory approval process as expected. Upon closing, the net proceeds that we receive on that transaction will be unencumbered at the holding company," according to a transcript provided by Thomson Reuters. While discussing possible capital deployment through share buybacks during the call, AIG CFO David Herzog said "the unencumbered proceeds from ILFC... will be available at the holding company for consideration."
Nagel wrote "assuming the buyer makes the escrow deposit and the deal remains on track, today's announcement likely serves as nothing more than a short-term buying opportunity in the stock (all else equal)." But if AIG decides to look for another way to divest ILFC, which Benmosche calls a "non-core asset," investors may not see the capital return they expect from AIG this year.