Davis Polk & Wardwell LLP is advising the Federal Reserve Bank of New York (FRBNY) and the U.S. Department of the Treasury (Treasury) in connection with their agreement in principle with American International Group, Inc. (AIG) for a series of integrated transactions to restructure the company and put it in a stronger position to repay taxpayers.

As part of the recapitalization, AIG expects to repay and terminate the FRBNY credit facility with resources from the parent as well as with proceeds from asset dispositions already underway. AIG will also issue approximately 1.655 billion shares of AIG common stock to the Treasury in exchange for approximately $49.1 billion of Series E and Series F preferred shares and the Series C preferred shares currently held by the AIG Credit Facility Trust. In addition, AIG will draw down up to $22 billion of funds available to the company under the Troubled Asset Relief Program to purchase an equal amount of the FRBNY’s preferred interests in two special purpose vehicles that hold all of the outstanding common stock of American Life Insurance Company and American International Assurance Company Ltd.

The Davis Polk team includes partners Paul R. Kingsley, John K. Knight, Ethan T. James, Bjorn Bjerke, John M. Brandow, Kathleen L. Ferrell and Marshall S. Huebner and associates William J. Chudd, Aaron Page, Brian Resnick, Joshua Ruland and Eli Vonnegut. All members of the Davis Polk team work in the New York office.