AIG – ILFC Deal Delayed

On June 15, 2013, through an SEC filing, AIG announced that it had amended the agreement with Jumbo Acquisition Limited relating to the sale of up to 90% of  ILFC’s tocks.  ILFC is a wholly-owned subsidiary of American International Group Inc (NYSE:AIG) and is the world’s largest aircraft lessor by value with approximately 1,000 owned and managed aircrafts.  In December 2012 AIG announced that it was selling a 90% stake in the company to Jumbo acquisition Limited which is a consortium of Chinese companies consisting of New China Trust, New China Life Insurance, P3 Investments and China Aviation Industrial Fund to raise funds in order to repay its $182 billion government bailout.  AIG deal to sell 90%  of ILFC is valued at $5.3bn (67% of ILFC’s book value at the time the deal was announced).  AIG would initially receive $4.23bn for an 80% stake with an option for the Chinese consortium to acquire an additional 9.9% stake.  AIG’s net proceeds from the sale are expected to be $3.7 billion said Barclays PLC (NYSE:BCS) (LON:BARC) today.

AIG - ILFC Deal Delayed

AIG May Terminate The Agreement

The amendment extends by one and a half months, to July 31, 2013, the date on which American International Group Inc (NYSE:AIG), may terminate the agreement if the closing of the transaction has not yet occurred. This follows an initial one month extension and a delayed payment of the 10% deposit from the Chinese consortium. Additionally, under the amendment AIG may pursue other offers for ILFC and may continue to pursue the alternative of a public offering.

The amendment also gives American International Group Inc (NYSE:AIG) the right to terminate the purchase agreement prior to July 31, 2013 if American International Group Inc (NYSE:AIG) determines that closing conditions relating to regulatory matters would not be satisfied by July 31, 2013.

The news for the amendment of the agreement seem to have little impact on ILFC’s business plans. Today, June 17, 2013, ILFC announced at the Paris air show  that  it would exercise its options to purchase 50 more Airbus A320NEO  in addition to the 100 originally ordered. The deal is worth $5 billion at list prices. ILFC also announced the signing of a letter of intent for the purchase of 50 E-Jets E2 aircraft from Embraer with an option for 50 more.