AIG (AIG) is reportedly in negotiations to sell a controlling stake in its aircraft-leasing...


AIG (AIG) is reportedly in negotiations to sell a controlling stake in its aircraft-leasing unit, International Lease Finance, to a group that includes New China Trust, China Aviation Industry Fund, and Industrial & Commercial Bank of China. A deal could value ILFC, which AIG has said it wants to take to IPO, at $5.5B.
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Comments (4)
  • ahouseoforange
    , contributor
    Comments (594) | Send Message
     
    $5.5 billon is on the low end of the estimates but probably best to get rid
    of it sooner than later.
    7 Dec 2012, 07:36 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11177) | Send Message
     
    This sale along with AIA should push the price to tangible book ratio down to ~0.36

     

    AIG is the cheapest stock in the Wilshire 5000!
    7 Dec 2012, 08:15 AM Reply Like
  • The_Hammer
    , contributor
    Comments (5052) | Send Message
     
    how much is aig valuing ilfc on balance sheet? are they gettingless than bv?
    if so would this not reduce bv?
    7 Dec 2012, 08:29 AM Reply Like
  • ahouseoforange
    , contributor
    Comments (594) | Send Message
     
    Yeah I think it would be sold below BV if it is sold for around 5.5 billion. However, with ILFC being such a capital intensive business (lots of debt) and having relatively low profit margins it would in the end be a huge help in further improving AIGs balance sheet. All kinds of entities do or used to be in the business of leasing planes due to the tax treatment involved. At this point it clearly is in AIG's interest though to get out and likely the benefit of improving the balance sheet further outweighs any negative aspect of selling below BV. If investors gain confidence (further) in AIG due to improved capital structure i.e. balance sheet then the price to book number will increase with will likely outweigh any or most of the impact of a couple billion no-cash charge to write down the lower sale price vs. BV.
    9 Dec 2012, 04:37 PM Reply Like
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