The Dow industrials ended at a fresh six-year low Friday, as worries about the outlook for the banking sector exacerbated fears of a prolonged recession.
AIG cinched a deal to sell most of its consumer finance unit to investment manager Fortress.
Under the deal, Fortress (FIG) will take over 80% of American General Finance and AIG (AIG) will hold onto the rest. Further terms weren’t disclosed, but the arrangement looks like a win for AIG chief Robert Benmosche (right) because it allows AIG to raise cash as it seeks to pay down its obligations to taxpayers stemming from its 2008 bailout.
“This transaction marks another important step in our ongoing restructuring process as we seek to monetize non-core assets and pay back U.S. taxpayers,” said Benmosche. “In Fortress, we have found an excellent partner for this terrific franchise. We believe in AGF’s solid business model, which is why we are retaining a 20% stake in the business as part of this transaction.”
American General has lent money to more than a million families across the U.S., Puerto Rico, the Virgin Islands, and the United Kingdom, AIG said. The firm makes bill consolidation loans, home equity loans, personal loans, home improvement loans, and loans to help consumers manage unexpected expenses.
AIG bought American General in 2001 as then CEO Hank Greenberg expanded the insurance giant’s reach. The unit posted an $11 million operating loss in the second quarter, which marked a sharp improvement from the year-ago $202 million loss, as the company set aside less money to cushion against future loan losses.
AIG’s investment in American General is valued at $2.4 billion, but the Financial Times reported last week that the firm conceded it might incur a loss on the sale as it raised $4 billion to repay a federal loan to its aircraft leasing business.
AIG shares are up 23% this year but dropped 3% in a market pullback Wednesday.
The Washington Post Co. said Monday it has sold struggling Newsweek magazine, which it has published for half a century, to audio industry pioneer Sidney Harman.
The financial terms of the deal were not announced. According to an article in the Washington Post citing an unnamed source, Harman is paying a “minimal” amount of cash but assuming obligations that could cost tens of millions of dollars.
“[Harman] has pledged not only to continue to produce a lively, compelling and first-rate news magazine, but also an equally dynamic Newsweek.com,” Donald Graham, chairman and chief executive officer of the Washington Post Co. said in a statement.
Harman, founder and chairman of audio equipment maker Harman International, called the Post a “national treasure.” He said he was looking forward to “this great journalistic, business and technological challenge.”
In the statement, the Washington Post Co. said that Harman plans to keep “a majority” of Newsweek’s staff. Newsweek reported that the magazine’s editor-in-chief, Jon Meacham, has already announced he will step down after the deal is completed.
Harman apparently wasn’t the only one eyeing the magazine. Other bidders included Fred Drasner, a former executive at U.S. News & World Report and the New York Daily News, as well as hedge fund Avenue Capital Group, which has a stake in America Media Inc., according to Newsweek.
