what happens to AIG's stock now that the government has bought an 80% stake in the company?

Informer answered one year ago …

QUOTE:

"The way the deal is structured, the Fed is lending up to $85 billion to AIG, and the U.S. government will effectively get a 79.9 percent equity stake in the insurer in the form of warrants, called "equity participation notes."

That doesn't mean the government owns 80 percent of AIG -- at least not yet, explained Jeffrey Lipshaw, an associate professor of law at Suffolk Law School

Lipshaw said warrants are options to buy the stock -- a right to own stock in the future, not present ownership.

The equity participation notes are another way of saying the government has an option to acquire an 80 percent equity stake in AIG down the road if the company for whatever reason does not pay back this really big loan."

So they don't own 80% yet -- the company will continue to operate as-is, aside from the obvious difficulty in paying back a LIBOR+8.5%! haha