American International Group Inc.
) is reconsidering to bid for the initial public offering (IPO)
of its aircraft leasing unit - International Lease Finance
Corporation (ILFC) - since its buyers failed to culminate the
deal for a third time. The company released a filing to intimate
about its IPO plan.
In Dec 2012, about 80% of ILFC was vended by AIG in a deal
with a Chinese consortium, comprising New China Trust Co. Ltd.,
China Aviation Industrial Fund and P3 Investments Ltd., for
approximately $4.23 billion. Further, the company granted an
opportunity to these investors to buy another 9.9% in ILFC,
taking the total deal value to about $5.28 billion. Subsequently,
AIG would retain the remaining 10% stake in ILFC.
However, the deal missed three deadlines on May 15, Jun 14 and
Jul 31, due to the delay in attaining regulatory approvals.
Hence, AIG extended the closure of sale to Aug 31, 2013.
Moreover, New China Trust has reportedly pulled out of the deal.
Given that no assurance on the culmination has appeared till
date, it likely that the fourth deadline may also be missed by
the Chinese consortium.
The divestment of AIG's stake in ILFC through an IPO comes as
an alternate option should the deal falls out. On the other hand,
if the deal is closed within the decided time, then AIG will have
the IPO registration cancelled.
This is not the first time that AIG has mulled the IPO option
for ILFC. Last year, the company was contemplating a similar
move, before the sale agreement of ILFC.
ILFC operates in over 80 countries through a vast fleet of
about 1,000 aircraft and is the largest customer for the
Dreamliner jets. The firm also has deals to procure new
high-demand, fuel-efficient aircrafts as well as rights to buy an
additional 50 such aircraft.
However, the company's financials are underperforming due to
decline in revenues from flight equipment rentals and higher
operating costs. Consequently, ILFC's net income plunged to $82.6
million in the first half of 2013 from $321.9 million in the
We believe the sooner the sale of IPO of ILFC takes place, the
quicker AIG will be able to release its blocked capital in ILFC
and focus better on its core operations. Along with AIG,
CNO Financial Group Inc.
Eastern Insurance Holdings Inc.
) carry a Zacks Rank #2 (Buy).
AMER INTL GRP (AIG): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis
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