AIG face big loss on airport stake
01.10.08
AIG, the struggling American insurer, may have suffered a heavy loss after it sold its entire stake in London City Airport to its joint venture partner for £250 million - two-thirds of the cost of its investment, according to press reports.
It had been reported over the weekend that AIG, which is selling assets to help repay an $85 billion loan from the US Federal Reserve, had sold half of its 50 percent share in the airport to Global Infrastructure Partners (GIP) for £250m, which would have represented a profit. However, it is now reported that AIG sold all of its stake for the amount – leaving GIP as the airport’s sole shareholder and AIG with a significant loss.
The deal came less than two years after AIG and GIP, an investment company owned by Credit Suisse, the Swiss-American banking group, and General Electric, the US conglomerate, bought London City Airport for £750m. Since then the pair have invested substantial sums in the business, helping to send passenger numbers soaring and almost doubling pre-tax profits last year.
Selling the stake, for a reported £250m, implies that AIG will have to book a loss on the sale of as much as £125m. Neither AIG nor GIP would confirm details of the deal.
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