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 If only Bob Barker was around to help American International Group Inc.'s (NYSE:AIG) CEO Robert Benmosche sell the troubled insurer's assets to bidders at valuations that meet or exceed expectations. However, with the economy the way it is and AIG's difficult situation, that's not the case. So, with a hefty government loan hanging over his head, Benmosche has put on his poker face and halted the sale of assets that aren't bringing in the expected bidding prices. At least three asset sales and a public offering could be stalled due to low bids.The sales of AIG's Taiwan unit Nan Shan Life Insurance, International Lease Finance Corp. and AIG Advisors could be held along with the IPOs of American International Assurance, or AIA, and American Life Insurance Co., or Alico, according to several reports. The sale of AIG's Nan Shan apparently pulled in only four bidders that all offered below $2 billion for the unit. Even though the sale is expected to be finalized by Sept. 4, Benmosche could still pull the plug on it. According to MarketWatch, Primus Financial Holdings Ltd. offered between $1.8 billion and $2 billion, while Cathay Financial Holding Co. offered $1.5 billion to $1.6 billion, Chinatrust Financial Holding Co. offered about $1.4 billion, and Fubon Financial Holding Co. offered about $1.3 billion. Meanwhile, AIG may have pressed pause on the auction process of International Lease Finance Corp. AIG and Steven Udvar-Hazy, are said to be "weighing several options for the aircraft leasing business, including breaking up the company," according to The Wall Street Journal. Reports by the Journal say Udvar-Hazy may buy about $2 billion of the company's aircraft portfolio and start a rival business. ILFC's fleet is valued at around $40 billion, however, the book value of the unit is $8 billion. Reportedly bids for the unit were less than half of that, even with government funding for a $5 billion backstop. The sale has been challenging due to over $30 billion in debt and the cost in maintaining the fleet. Greenbriar Equity Group LLC and Onex Partners were apparently part of a consortium that had been bidding for the unit in June. One auction has definitely come to a complete standstill. Benmosche recently halted the auction of AIG Advisors after its valuation began sinking due to employees fleeing the company. As far as taking AIA and Alico public, Benmosche said he could wait as long as three years to offer stakes in the companies, according to according to The Wall Street Journal. Listings of the units were expected to raise $25 billion, and bankers have already been hired to complete the process, which was expected to happen in the first quarter of 2010. There had been rumors and reports that MetLife Inc. (NYSE:MET) may have been interested in bidding for pieces of Alico and that it was back on the block. There are still several other ongoing auctions taking place including: News is that Perella Weinberg Partners LP, the New York-based investment bank and asset management firm, has dropped out of a consortium bidding for AIG's asset management arm, AIG Investments. The decision could threaten the stability of the consortium, being led by private equity firm Crestview Partners LP and including Hong Kong investor Richard Li, according to The Deal. Crestview was said to be bidding $300 million to $400 million for the unit (subscribers see auction details in The Deal Pipeline). Religare Enterprises Ltd. and Australian banking giant Macquarie Group were also said to be bidding on the unit, according to Reuters. Valuations on the unit has ranged from $1.7 billion in January 2009 to $350 million in July 2009. The AIG Global Real Estate fund management business has around $12.4 billion in assets and $5.2 billion in equity capital. The unit could be sold for about $9 billion. Interested bidders could include BlackRock Inc. and Blackstone Group LP (NYSE:BX) (which might be a conflict because Blackstone is advising). Included in that is its Japanese headquarters in Tokyo, which may bring in more than $1 billion. AIG's property and casualty division could also be on the block or may spin out into a public entity. Ski resort Stowe Mountain Resort is also up for sale, according to The Burlington Free Press.For the latest on all of AIG's auctions check out The Deal's Pipeline (subscription required). - Maria Woehr
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Unless valuations improve, and stay improved, it will be very difficult for the equity to be worth more than zero. Also, if AIG is selling insurance aggressively, or shorting their P&C reserves, even with higher valuations, the common could still be a zero.