424B2
|
|
|
PRICING SUPPLEMENT NO. AIG-FP-41
|
|
FILED PURSUANT TO RULE 424(b)(2) |
DATED OCTOBER 19, 2007
|
|
REGISTRATION NOS. 333-106040; 333-143992 |
TO PROSPECTUS DATED JULY 13, 2007 |
|
|
AND PROSPECTUS SUPPLEMENT DATED JULY 13, 2007 |
|
|
AMERICAN INTERNATIONAL GROUP, INC.
MEDIUM-TERM NOTES, SERIES AIG-FP,
LIBOR RANGE NOTES DUE OCTOBER 24, 2022
|
|
|
Principal Amount: U.S.$5,000,000
|
|
Issue Date: October 24, 2007 |
|
|
|
Agents Discount or Commission: None
|
|
Stated Maturity Date: October 24, 2022 |
|
|
|
Net Proceeds to Issuer: U.S.$5,000,000
|
|
Interest Rate: For each Interest
Accrual Period from and including the
Interest Accrual Period commencing on
the Issue Date to and including the
Interest Accrual Period ending on the
Stated Maturity Date: 8.325% times
Interest Accrual Factor |
|
|
|
Interest Payment Dates: Quarterly, on each January 24,
April 24, July 24, and October 24 commencing January 24,
2008 and ending on the Maturity Date (whether the Stated
Maturity Date or an earlier Redemption Date). If any
such date is not a Business Day, the related Interest
Payment Date will be the next following day that is a
Business Day, and no additional interest will be payable
on such Interest Payment Date as a result of any such
delay in payment.
|
|
Interest Accrual Factor: For any
Interest Accrual Period, the number
of Business Days during that Interest
Accrual Period in respect of which 6m
USD LIBORREF is greater
than or equal to the applicable Lower
LIBOR Barrier and less than or equal
to the applicable Upper LIBOR
Barrier, divided by the total number
of Business Days in such Interest
Accrual Period. |
|
|
|
Period End Dates: Quarterly, on each January 24, April
24, July 24, and October 24 commencing January 24, 2008
and ending on the Maturity Date, such dates not subject
to adjustment whether or not such dates are Business
Days.
|
|
Interest Accrual Periods: The
quarterly period from and including
the Issue Date (in the case of the
first Interest Accrual Period) or the
previous Period End Date, as
applicable, to but excluding the next
Period End Date. |
|
|
|
|
|
Reference Rate Cut-Off: For each
Business Day in an Interest Accrual
Period starting on and including the
fifth calendar day prior to the
Period End Date for such Interest
Accrual Period and ending on and
excluding such Period End Date, 6m
USD LIBORREF will be
equal to 6m USD LIBORREF
as determined on such fifth
calendar day prior to such Period End
Date, provided that if such fifth
calendar day is not a Business Day,
then 6m USD LIBORREF will
be as determined on the first
Business Day immediately preceding
such fifth calendar day. |
|
|
|
Form: þ Book Entry o Certificated
|
|
CUSIP No.: 02687QCY2 |
|
|
|
Specified Currency (If other than U.S. dollars): N/A
|
|
Authorized Denominations: U.S.$1,000
and multiples of U.S.$1,000 in excess
thereof. |
The notes are being placed through or purchased by the Agents listed below:
|
|
|
|
|
|
|
|
|
Agent
|
|
Principal Amount |
|
|
|
|
|
|
Merrill Lynch, Pierce, Fenner & Smith Incorporated
|
|
U.S.$5,000,000
|
|
Capacity:
|
|
o Agent
|
|
þ Principal |
|
|
|
If as Agent:
|
|
The notes are being offered at a fixed initial public offering price of ___% of principal amount. |
If as Principal:
|
|
o The notes are being offered at varying prices related to prevailing market prices at the time of resale. |
|
|
þ The notes are being offered at a fixed initial public offering price of 100% of principal amount. |
Redemption at Option of Issuer:
The notes will be redeemable, in whole only, at the option of the Issuer, upon written notice of a
minimum of eight (8) calendar days, at 100% of the Principal Amount, on the Interest Payment Date
scheduled to fall on October 24, 2008 and on each Interest Payment Date thereafter (such date, the
Redemption Date).
Events of Default and Acceleration:
In case an Event of Default with respect to any of the notes has occurred and is continuing, the
amount payable to a holder of a note upon any acceleration permitted by the notes will be equal to
the amount payable on that note calculated as though the date of acceleration were the Maturity
Date of the notes.
In case of default in payment of the notes, whether at the Stated Maturity Date, upon redemption,
or upon acceleration, from and after that date the notes will bear interest, payable upon demand of
their holders, at the rate equal to the interest applicable to the Interest Accrual Period or
portion thereof as of the date on which the default occurs, to the extent that payment of interest
is legally enforceable on the unpaid amount due and payable on that date in accordance with the
terms of the notes to the date payment of that amount has been made or duly provided for.
Other Provisions:
|
|
|
Maturity Date
|
|
The earlier of the Stated Maturity Date or a Redemption Date. |
|
|
|
Business Day
|
|
Means any day other than a day that (i) is a Saturday or Sunday, (ii) is a day on which banking institutions
generally in the City of New York are authorized or obligated by law, regulation or executive order to close or
(iii) is a day on which transactions in dollars are not conducted in the City of New York. |
|
|
|
6m USD LIBORREF
|
|
For any day within an Interest Accrual Period, the rate for
deposits in U.S. Dollars for a designated maturity of 6 months which appears on Reuters Page
LIBOR01 as of 11:00 a.m. London time on such day (or if such day is not a London business day,
on the immediately preceding London business day), subject to the Reference Rate Cut Off
provisions above. |
|
|
|
Lower LIBOR Barrier
|
|
0.00% |
|
|
|
Upper LIBOR Barrier
|
|
7.00% |
|
|
|
Day Count Convention:
|
|
30/360 |
|
|
|
Calculation Agent:
|
|
AIG Financial Products Corp. (AIG-FP) |
P-2
Examples of Calculation of Interest Rate:
Example 1: Assuming that, during a 61-Business Day Interest Accrual Period commencing on or after
October 24, 2007 and ending prior to October 24, 2022, the value of 6m USD LIBORREF is
greater than or equal to the Lower LIBOR Barrier and less than or equal to the Upper LIBOR Barrier
on every Business Day in the applicable Interest Accrual Period, on the applicable Interest Payment
Date, the Interest Rate per annum for the applicable Interest Accrual Period would be 8.325%
calculated as follows: 8.325% x 61/61 = 8.325% per annum.
Example 2: Assuming that, during a 61-Business Day Interest Accrual Period commencing on or after
October 24, 2007 and ending prior to October 24, 2022, the value of 6m USD LIBORREF is
less than the Lower LIBOR Barrier or greater than the Upper LIBOR Barrier on every Business Day in
the applicable Interest Accrual Period, on the applicable Interest Payment Date, the Interest Rate
per annum for the applicable Interest Accrual Period would be 0.00% calculated as follows: 8.325% x
0/61 = 0.00% per annum.
Example 3: Assuming that, during a 61-Business Day Interest Accrual Period commencing on or after
October 24, 2007 and ending prior to October 24, 2022, the value of 6m USD LIBORREF is
greater than or equal to the Lower LIBOR Barrier and less than or equal to the Upper LIBOR Barrier
on 35 Business Days in the applicable Interest Accrual Period, on the applicable Interest Payment
Date, the Interest Rate per annum for the applicable Interest Accrual Period would be 4.77664%
calculated as follows: 8.325% x 35/61 = 4.77664% per annum.
RISK FACTORS
Investing in the Notes involves a number of significant risks not associated with similar
investments in a conventional debt security, including, but not limited to, fluctuations in 6m USD
LIBORREF and other events that are difficult to predict and beyond AIGs control.
Accordingly, prospective investors should consult their financial and legal advisors as to the
risks entailed by an investment in the notes and the suitability of the notes in light of their
particular circumstances.
Limitations on Returns on the Notes.
The interest payable on the notes is uncertain, and movements in the applicable LIBOR rate will
affect whether or not and the extent to which you will receive interest on the notes in any
Interest Accrual Period.
The maximum Interest Rate on the notes is 8.325%. However, for every day during an Interest
Accrual Period on which 6m USD LIBORREF is below the Lower LIBOR Barrier or above the
applicable Upper LIBOR Barrier, the applicable Interest Rate for that Interest Accrual Period will
be reduced, and accordingly, your return for any Interest Accrual Period over the life of the notes
could be significantly less than maximum Interest Rate for that Interest Accrual Period. If 6m USD
LIBORREF is below the Lower LIBOR Barrier or above the applicable Upper LIBOR Barrier
on every day in any Interest Accrual Period, the applicable Interest Rate for that Interest Accrual
Period will be zero.
Historical performance of 6m USD LIBORREF should not be taken as an indication of the
future performance of 6m USD LIBORREF during the term of the notes.
It is impossible to predict whether 6m USD LIBORREF will increase or decrease. 6m USD
LIBORREF will be influenced by complex and interrelated political, economic, financial
and other factors; therefore, the historical performance of 6m USD LIBORREF should not
be taken as an indication of future performance thereof during the term of the notes.
Factors that may affect the level of 6m USD LIBORREF include monetary policy, interest
rate volatility, interest rate levels and the inflation rate.
Please note that historical trends are not indicative of future behavior of 6m USD
LIBORREF.
The inclusion of compensation and projected profits from hedging in the original issue price is
likely to adversely affect secondary market prices.
Assuming no change in market conditions or any other relevant factors, the price, if any, at which
we (or any of our affiliates or any market maker) are willing to purchase the notes in secondary
market transactions will likely be lower, and may be materially lower, than the price at which we
sold the notes to the Agent. In addition, any such prices may differ from values
P-3
determined by pricing models used by us or any of our affiliates or any market maker as a result of
dealer discounts, mark-ups or other transactions.
Market factors may influence whether we exercise our right to redeem the notes prior to their
scheduled maturity.
It is more likely that we will redeem the notes prior to their Stated Maturity Date to the extent
that the calculation of the Interest Rate results in an amount of interest in respect of the notes
greater than that for instruments of a comparable maturity and credit rating trading in the market.
If we redeem the notes prior to their Stated Maturity Date, you may be unable to invest in
securities with similar risk and yield as the notes and replacement investments may be more
expensive than your investment in the notes. Your ability to realize market value appreciation and
any interest is limited by our right to redeem the notes prior to their scheduled maturity.
There may not be an active trading market in the notes and sales prior to maturity may result in
losses.
There may be little or no secondary market for the notes. We do not intend to list the notes on
any stock exchange or automated quotation system, and it is not possible to predict whether a
secondary market will develop for the notes. Even if a secondary market for the notes develops, it
may not provide significant liquidity or result in trading of notes at prices advantageous to you.
Sales in the secondary market may result in significant losses. The Agent currently intends to act
as market makers for the notes, but it is not required to do so, and may stop doing so at any time.
We expect there will be little or no liquidity in the notes. The prices that may be offered in
the secondary market for the notes will be discounted to reflect hedging and other costs and, among
other things, changes of and volatility in interest rates in the market.
The market value of the notes may be influenced by unpredictable factors.
The market value of your notes may fluctuate between the date you purchase them and the Maturity
Date. Several factors, many of which are beyond our control, will influence the market value of
the notes. We expect that generally 6m USD LIBORREF on any day and expectations
relating to the future level of 6m USD LIBORREF will affect the market value of the
notes more than any other single factor. Other factors that may influence the market value of the
notes include:
|
|
|
supply and demand for the notes, including inventory positions held by any market maker; |
|
|
|
|
economic, financial, political and regulatory or judicial events that affect financial
markets generally; interest rates in the market generally; |
|
|
|
|
the time remaining to maturity; |
|
|
|
|
our right to redeem the notes; and |
|
|
|
|
our creditworthiness and credit ratings. |
We may have conflicts of interests arising from our relationships with the Calculation Agent.
You should be aware that AIG-FP, our subsidiary, in its capacity as Calculation Agent for the
notes, is under no obligation to take your interests into consideration in determining the number
of days on which interest will accrue, and is only required to act in good faith and in a
commercially reasonable manner. AIG-FP as Calculation Agent will, among other things, also
determine the applicable Interest Rate payment to be made on the notes. Because these
determinations by the Calculation Agent will affect the interest payments and the payment at
maturity on the notes, conflicts of interest may arise in connection with its performance of its
role as Calculation Agent.
P-4
ERISA CONSIDERATIONS
The notes may not be purchased or held by any employee benefit plan or other plan or account that
is subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA) or Section
4975 of the Code (each, a plan), or by any entity whose underlying assets include plan assets
by reason of any plans investment in the entity (a plan asset entity), unless in each case the
purchaser or holder is eligible for exemptive relief from the prohibited transaction rules of ERISA
and Section 4975 of the Code under a prohibited transaction class exemption issued by the
Department of Labor or another applicable statutory or administrative exemption. Each purchaser or
holder of the notes will be deemed to represent that either (1) it is not a plan or plan asset
entity and is not purchasing the notes on behalf of or with plan assets or (2) with respect to the
purchase and holding, it is eligible for relief under a prohibited transaction class exemption or
other applicable statutory or administrative exemption from the prohibited transaction rules of
ERISA and Section 4975 of the Code. The foregoing supplements the discussion under ERISA
Considerations in the base prospectus dated July 13, 2007.
USE OF PROCEEDS
We intend to lend the net proceeds from the sale of the notes to our subsidiary AIG-FP or certain
of its subsidiaries for use for general corporate purposes.
P-5
HISTORICAL INFORMATION ON 6M USD LIBORREF
The following graph sets forth the historical levels of 6m USD LIBORREF for the years
indicated. You should not take the past performance of 6m USD LIBORREF as an indication
of future performance.
Source: Bloomberg L.P. (without independent verification)
P-6
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
For the reasons described below, we believe that the notes should be characterized as variable
rate notes for U.S. federal income tax purposes and we intend to treat the notes as such. For a
summary of the material U.S. federal income tax consequences of owning variable rate notes, please
see the description under the heading United States Taxation United States Holders Original
Issue Discount Variable Rate Notes in the accompanying prospectus supplement.
Under the applicable U.S. Treasury Regulations governing original issue discount on debt
instruments, a debt instrument is a variable rate note if it provides for interest at an
objective rate (that is, a rate determined using a single interest rate formula based on
objective financial or economic information), unless the notes are reasonably expected to provide
for significant front-loading or back-loading of interest. We believe that, although the
applicable U.S. Treasury Regulations are not entirely clear, the existence of our option to call
the notes should be taken into account in determining whether the notes are reasonably expected to
provide for significant front-loading or back-loading of interest. Taking into account that
option, we do not expect there to be significant front-loading or back-loading of interest
payments on the notes, and the notes would qualify as variable rate notes.
You should be aware that our expectations regarding front-loading and back-loading of
interest are only applicable for purposes of determining the tax treatment of your notes. We are
not making any representation or prediction regarding the actual amount of interest that may be
payable on your note, and we are under no obligation to call, and we are not making any promise or
representation that we will call, the notes prior to their Stated Maturity Date.
Alternatively, if the notes were found to have significant front-loading or back-loading of
interest, it is possible that your notes could be characterized as contingent payment obligations
subject to rules described under the heading United States Taxation United States Holders
Original Issue Discount Notes Subject to the Contingent Payment Obligation Rules in the
accompanying prospectus supplement. In that case, among other differences, as more completely
described in the prospectus supplement, United States Holders of the notes that otherwise use the
cash receipts and disbursements method of accounting would be required to use an accrual method of
accounting in determining their income from ownership of the notes, and gain from a sale,
redemption or exchange of the notes would be treated as ordinary income rather than capital gain.
GENERAL INFORMATION
The information in this Pricing Supplement, other than the information regarding the initial public
offering price, the net proceeds to the issuer, the identities of the initial purchasers or agents,
the information under Examples of Calculation of Interest Rate, Certain U.S. Federal Income Tax
Consequences, ERISA Considerations and Risk Factors above, and the following two paragraphs,
will be incorporated by reference into the Global Security representing all the Medium-Term Notes,
Series AIG-FP.
We are offering notes on a continuing basis through AIG Financial Securities Corp., ABN AMRO
Incorporated, ANZ Securities, Inc., Banca IMI S.p.A., Banc of America Securities LLC, Barclays
Capital Inc., Bear, Stearns & Co. Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp.,
BNY Capital Markets, Inc., Calyon Securities (USA) Inc., CIBC World Markets. Corp., Citigroup
Global Markets Inc., Credit Suisse Securities (USA) LLC, Daiwa Securities America Inc., Daiwa
Securities SMBC Europe Limited, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Greenwich
Capital Markets, Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Key Banc Capital
Markets Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mitsubishi
UFJ Securities International plc, Mizuho International plc, Mizuho Securities USA Inc., Morgan
Stanley & Co. Incorporated, National Australia Capital Markets, LLC, RBC Capital Markets
Corporation, Santander Investment Securities Inc., Scotia Capital (USA) Inc., SG Americas
Securities, LLC, TD Securities (USA) LLC, UBS Securities LLC, and Wachovia Capital Markets, LLC, as
agents, each of which has agreed to use its best efforts to solicit offers to purchase notes. We
may also accept offers to purchase notes through other agents. See Plan of Distribution in the
accompanying prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of the notes or determined if the prospectus, the prospectus supplement or
this pricing supplement is truthful or complete. Any representation to the contrary is a criminal
offense.
P-7