Explanation of AIG reverse split and consequences
You might be wondering about what happened to AIG shares. The answer is simple: the company decided to make a reverse stock split.
Following that measure, American International Group Inc (stock ticker: AIG) shares of this troubled insurer were down $4.53, or 19.5 percent, to $18.67 in early-afternoon trade on the New York Stock Exchange (NYSE).
The reverse split was approved at the AIG annual meeting on Tuesday. The shares closed at a pre-split $1.16 on Tuesday.
The only consequence of this reverse split is to seek some kind of psychological advantage, since the share price was too low, but what they were hoping for did not occur.
Before the split, the shares had traded below $2 for much of the year, weighed down by the company’s nearly $100 billion in losses last year and a taxpayer bailout that left the U.S. government owning a nearly 80% stake in the company.
The shares also fell sharply on Tuesday after Chief Executive Ed Liddy said at the annual meeting that he could not give any assurance that the shares would ever recover or that the U.S. government would ever relinquish its majority ownership of the company.
AIG disclosed its plans for the reverse stock split in a regulatory filing on May 21, but the news was overshadowed by an announcement that same day that Liddy planned to step down as CEO and chairman once successors were found. Read the rest of this entry »
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