As Filed Pursuant to Rule 424(b)(5)
Registration No. 033-48996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 19, 2003)
U.S. $24,100,000
(SUBJECT TO REDUCTION)
AVAILABLE PRINCIPAL COMMITMENT
AND
U.S. $1,852,068.49
(SUBJECT TO REDUCTION)
AVAILABLE INTEREST COMMITMENT
LIQUIDITY FACILITY OBLIGATIONS
OF
AIG LIQUIDITY CORP.
AND
GUARANTEE OBLIGATIONS
OF
AMERICAN INTERNATIONAL GROUP, INC.
IN SUPPORT OF THE PAYMENT OF PURCHASE PRICE
OF TENDERED HOSPITAL AUTHORITY NO. 1 OF LANCASTER COUNTY NEBRASKA,
HOSPITAL REVENUE FUNDING BONDS, SERIES 1996
In connection with the replacement of the current liquidity facility in
effect for the 1996 Bonds (as defined herein), AIG Liquidity Corp. is offering
payment obligations under a standby purchase agreement, which we refer to as the
"Liquidity Facility Obligations." The Liquidity Facility Obligations are
unconditionally guaranteed by AIG. The 1996 Bonds bear interest at a variable
weekly rate and are subject to optional and mandatory tender for purchase to
Wells Fargo Bank Nebraska, National Association, as the tender agent. We are
entering a standby purchase agreement, which we refer to as the Standby
Agreement, under which we will, subject to certain conditions, purchase the
tendered bonds at a purchase price equal to the aggregate principal amount of
the tendered bonds plus accrued interest to the purchase date.
The Liquidity Facility Obligations under the standby agreement and the
unconditional guarantee of AIG (the "Guarantee Obligations" and together with
the Liquidity Facility Obligations the "Obligations") are not being offered
separately from the Bonds, which are being offered pursuant to a separate
Official Statement of Hospital Authority No. 1 of Lancaster County Nebraska,
which we refer to as the "Authority." The Obligations will expire on September
3, 2004 unless extended or sooner terminated as described in this Prospectus
Supplement. The Obligations are not severable from the 1996 Bonds and may not be
separately traded. The 1996 Bonds are the obligations solely of the Authority
and are not issued or guaranteed by us or AIG. This Prospectus Supplement is
being delivered in connection with the remarketing of the 1996 Bonds after a
mandatory tender for purchase under the bond indenture, which we refer to as the
"Indenture," and may also be delivered in connection with a remarketing of the
Bonds purchased by us under the Standby Agreement.
THESE SECURITIES HAVE NOT BEEN APPROVED OF DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECUS SUPPLEMENT OR THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE
CITIGROUP
REMARKETING AGENT
The date of this Prospectus Supplement is September 19, 2003.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ATTACHED PROSPECTUS OR INFORMATION CONTAINED IN DOCUMENTS
WHICH YOU ARE REFERRED TO BY THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED
PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION
DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED
PROSPECTUS. WE ARE OFFERING TO SELL THE SECURITIES ONLY IN JURISDICTIONS WHERE
OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ATTACHED PROSPECTUS IS ACCURATE ONLY AS OF THE DATE ON THE
FRONT OF THOSE DOCUMENTS, REGARDLESS OF THE TIME OF DELIVERY OF THE DOCUMENTS OR
ANY SALE OF THE SECURITIES.
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Introduction....................... S-1
Plan of Distribution............... S-1
The Bonds.......................... S-1
Standby Agreement.................. S-2
The AIG Guarantee.................. S-6
Prospectus
Where You Can Find More
Information........................ 3
Incorporation of Certain Documents
by Reference....................... 3
Description of the Obligations..... 5
AIG Liquidity Corp................. 9
American International
Group, Inc......................... 9
Use of Proceeds................... 10
Plan of Distribution............... 10
Validity of Obligations............ 10
Experts............................ 11
Cautionary Statement Pursuant
To the Private Securities
Litigation Reform Act of 1995...... 11
INTRODUCTION
This Prospectus Supplement provides you with a summary of information
about the 1996 Bonds and information regarding our Liquidity Facility
Obligations and the Guarantee Obligations of AIG. We are providing Liquidity
Facility Obligations in support of $24,100,000 aggregate principal amount of the
1996 Bonds.
On June 3, 1996, the Authority issued $35,750,000 aggregate principal
amount of its Hospital Revenue Refunding Bonds, Series 1996, due June 1, 2012
which we refer to as the 1996 Bonds. The Authority entered into a loan
agreement, dated May 1, 1994, which we refer to as the Loan Agreement, with
BryanLGH Medical Center as successor to Bryan Memorial Hospital, referred to
herein as the Hospital. Under the Loan Agreement, the Authority agreed to
provide the proceeds of the sale of the Bonds to the Hospital. The proceeds were
used to redeem previously issued bonds. The Hospital agreed to make payments
under the Loan Agreement directly to the Trustee as the Authority's assignee.
Owners of the 1996 Bonds have the right to tender, and in certain cases
are required to tender, the 1996 Bonds for purchase to the Tender Agent.
Citigroup Global Markets Inc., the Remarketing Agent, must use its best efforts
to locate investors to purchase the tendered Bonds. In connection with the issue
of the Bonds, the Hospital entered into a standby purchase agreement with a
commercial bank, which we refer to as the "Bank". Under the agreement, the bank
is required, subject to certain conditions, to provide funds to the tender agent
for the purchase of tendered Bonds that the Remarketing Agent was not able to
sell to new investors.
As is permitted under the Indenture and the standby purchase agreement
with the Bank, the Hospital is entering a replacement standby agreement with us
under which we will be required, subject to certain conditions, to purchase 1996
Bonds tendered voluntarily by the holders or tendered pursuant to certain
mandatory tender for purchase requirements, in the event that the Remarketing
Agent cannot sell the tendered 1996 Bonds to new investors.
The Indenture provides that the replacement of the Bank with AIG-LC and
the registration of our Liquidity Facility Obligations triggers a mandatory
tender for purchase of all of the outstanding Bonds five days before the
effectiveness of the Standby Agreement. The Remarketing Agent has agreed to use
its best efforts to resell the Bonds that are subject to such mandatory tender
for purchase.
PLAN OF DISTRIBUTION
The Obligations are not being sold separately from the Bonds, which are
being remarketed pursuant to the Official Statement of the Authority, dated June
1, 1996, as supplemented, which we refer to as the Official Statement. Neither
we nor AIG had any role in preparing the Official Statement and neither we nor
AIG undertakes any responsibility with respect to the accuracy or completeness
of the Official Statement or any information set forth therein.
THE BONDS
The 1996 Bonds were issued on June 3, 1996 pursuant to a Trust Indenture
between the Authority and Wells Fargo Bank Nebraska, National Association,
formerly the National Bank of Commerce Trust and Savings Association, as
trustee. The 1996 Bonds mature on June 1, 2012 and are subject to redemption as
described below.
The 1996 Bonds bear interest at a weekly interest rate that is adjusted
each week by the Remarketing Agent. The interest rate is set at the rate at
which the Remarketing Agent determines it could sell the 1996 Bonds at a price
of 100% of their principal amount plus any accrued interest. The 1996 Bonds will
not bear an interest rate of more than 15% per annum, except in the case of Bank
Bonds, which are described in the next section and which may bear a maximum
interest rate of 25% per annum. The Hospital may, subject to certain conditions
specified in the Indenture, elect to convert the interest rate on the 1996 Bonds
to a long-term interest rate that is not adjusted on a weekly basis. Neither we
nor AIG will participate in the determination of either the weekly interest rate
or any applicable long-term interest rate. The Remarketing Agent's determination
of the weekly interest rate and the long-term interest rate is conclusive and
binding upon the
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Remarketing Agent, the Trustee, AIG-LC as the Standby Purchaser, the bond
insurer of the 1996 Bonds, the Authority, the Tender Agent and the owners of the
1996 Bonds.
The 1996 Bonds may be redeemed in whole or in part at the option of the
Hospital on any date on which interest is paid on the 1996 Bonds. The redemption
price is 100% of the principal amount of the 1996 Bonds plus accrued interest.
In the event that the Bonds are converted to pay interest at the long-term
interest rate, the Hospital may redeem the 1996 Bonds on the first day that the
bonds are converted to such interest rate at a price of 100% of the principal
amount plus accrued interest, and on each June 1 thereafter at the prices
specified in the Indenture. The 1996 Bonds are also subject to a sinking fund
provision which causes mandatory redemption of a certain principal amount of the
1996 Bonds on the first Wednesday of each June.
Payments of principal and interest on the 1996 Bonds are insured by a
Municipal Bond Insurance Policy with MBIA Insurance Corp., which unconditionally
guarantees scheduled payments of principal (when due at maturity or upon payment
pursuant to the sinking fund provisions in the Indenture) and of interest on the
1996 Bonds including interest at the Bank Bond rates, as described below. The
Policy does not guarantee payment of the purchase price of bonds tendered for
purchase.
Neither we nor AIG is responsible for payment of principal of or interest
due on the 1996 Bonds.
BANK BONDS
Any 1996 Bonds purchased by us that are not subsequently remarketed by the
Remarketing Agent are classified as "Bank Bonds." A Bank Bond bears interest at
a rate determined in accordance with the Standby Agreement until such Bond is no
longer classified as a Bank Bond. The Bank Bond interest rate will equal the
higher of (a) the Prime Rate (determined by a bank selected in good faith by us)
or (b) the Federal Funds Rate +0.5% per annum (the "Base Rate") except (i) when
there is an event of default under the Standby Agreement, (ii) a Bank Bond has
been a Bank Bond for more sixty (60) days or more or (iii) when our duty to
purchase bonds has ceased. In such circumstances, the Bank Bond interest rate
will be the Base Rate plus two (2) percent provided that the Bank Bonds interest
rate may never exceed 25%.
In the event that interest on the Bank Bonds as calculated pursuant to (a)
and (b) above would be greater than 25% in the absence of the of the 25%
interest rate limit, then the amount of interest that would have accrued in the
absence of the 25% limitation will be considered the Excess Bond Interest
Amount. If when calculated according to the paragraph above the Bank Bond
interest rate is below 25% on any date, and on that date there is a positive
Excess Bond Interest Amount, then the interest rate on the Bank Bonds will be
25% on the date on which the interest would otherwise have been below 25%,
provided, however, that if application of an interest rate of 25% on such date
will reduce the Excess Bond Interest Amount to less than zero, then the interest
rate will be such interest rate that will result in a reduction of the Excess
Bond Interest Amount to zero.
1996 Bonds will cease to be Bank Bonds when they are sold by us pursuant
to a remarketing of the Bank Bonds by the Remarketing Agent, or if we or a
subsequent purchaser directly from us elects not to sell the Bank Bonds pursuant
to a remarketing arrangement by the Remarketing Agent.
Bank Bonds are not subject to purchase with funds we provide to the Tender
Agent under the Standby Agreement.
THE AIG FINANCIAL PRODUCTS SWAP AGREEMENT
The Hospital has entered into an interest rate swap agreement with AIG
Financial Products Corp., a Delaware corporation, which we refer to as AIGFP.
Under the agreement the Hospital is paying to AIGFP a fixed rate equal to 5.73%
of the outstanding principal amount of the bonds, subject to certain conditions.
AIGFP is paying the Hospital a variable rate equal to the interest on the bonds.
AIGFP's payment obligations under the swap agreement are guaranteed by AIG.
STANDBY AGREEMENT
AVAILABLE COMMITMENT; PURCHASE PERIOD
AIG-LC is obligated to make available $25,952,068.49 for purchase of the
1996 Bonds,
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$24,100,000 of which is the aggregate principal amount of the 1996 Bonds
outstanding, which we refer to as the "Available Principal Commitment," and
$1,852,068.49 of which is an amount which represents 187 days of accrued
interest on such outstanding 1996 Bonds, which we refer to as the "Available
Interest Commitment." The Available Principal Commitment will be decreased by
(i) the aggregate principal amount of 1996 Bonds that are redeemed and are no
longer outstanding under the Indenture and (ii) the aggregate principal amount
of 1996 Bonds that we purchase under the Standby Agreement. The Available
Principal Commitment will be increased by (i) the aggregate principal amount of
1996 Bonds we sell or another holder of Bank Bonds sells through the Remarketing
Agent under the Standby Agreement or (ii) the aggregate principal amount of 1996
Bonds, which we or another holder of Bank Bonds elects keep under the Standby
Agreement after receiving notice of successful remarketing by the Remarketing
Agent. The Available Principal Commitment may also be reduced in connection with
certain remedies to the Events of Default specified in this Prospectus
Supplement. The Available Interest Commitment is decreased or increased
corresponding to the decrease or increase in the Available Principle Commitment.
The obligation of AIG-LC to provide funds to purchase 1996 Bonds tendered
to the Tender Agent will be effective from the date the Standby Agreement is
delivered to the Tender Agent, until the earliest of:
- September 3, 2004 or such later expiration date as may become
effective pursuant to the terms of the Standby Agreement;
- the date we receive a certificate signed by an officer of the Tender
Agent stating that the period during which we are required to
purchase tendered 1996 Bonds has been terminated pursuant to the
terms of the Indenture because either a new standby agreement has
been provided under the Indenture and as provided in the Standby
Agreement, or no 1996 Bonds remain outstanding;
- the close of business on the day after we receive notice from an
officer of the Tender Agent that the 1996 Bonds have been converted
to a long-term interest rate and such interest rate has gone into
effect;
- the close of business on the date that the Hospital provides notice
to us that the Hospital has elected to terminate the Standby
Agreement as permitted under the terms of the Standby Agreement;
- the date of termination of the Available Principal and Available
Interest Commitments and AIG-LC's obligation to purchase 1996 Bonds
due as a result of an Event of Default under the Standby Agreement.
We refer to this period as the "Purchase Period." The Purchase Period will
not be extended without our consent.
FUNDING OF PURCHASE OF TENDERED BONDS BY THE TENDER AGENT FOR THE ACCOUNT OF
AIG-LC
No later than 12:00 noon (New York time) on the day after a Bondholder
tenders 1996 Bonds for purchase we will receive notice from the Tender Agent of
such tender that includes the principal amount of the 1996 Bonds tendered for
purchase and the date specified for purchase. No later than 4:00 p.m. (New York
time) on the day before the Tender Agent must purchase bonds that have been
tendered, the Remarketing Agent must inform the Tender Agent of the principal
amount of 1996 Bonds for which it has received an indication of interest from
prospective purchasers. No later than 5:00 p.m. (New York time) on such date the
Tender Agent must provide us with notice of the amount of 1996 Bonds for which
the Remarketing Agent has received indications of interest. No later than 10:00
a.m. (New York time) on the business day on which the 1996 Bonds must be
purchased by the Tender Agent, which we refer to as the "Purchase Date," the
Tender Agent must provide us with notice of the 1996 Bonds that have been sold
by the Remarketing Agent and the aggregate purchase price (consisting of the
aggregate principal amount of such 1996 Bonds plus accrued interest) of those
1996 Bonds that were not sold and therefore must be purchased by us.
After the receipt of such notice, we will, by no later than 2:00 p.m. (New
York time) on the Purchase Date make available to the Tender
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Agent in immediately available funds, the purchase price of such 1996 Bonds.
SALES OF BANK BONDS BY AIG-LC
We may sell Bank Bonds at any time subject to the terms of the Standby
Agreement. Such sales (other than those following a remarketing of the Bank
Bonds by the Remarketing Agent) will be made only to institutional investors or
other entities or individuals which customarily purchase commercial paper or
tax-exempt securities in large denominations.
We must notify the Trustee, Tender Agent and Remarketing Agent of any such
sales of Bank Bonds and notify the transferee that (i) that such 1996 Bond is no
longer one of the bonds that we are required to purchase under the Standby
Agreement as long as it remains a Bank Bond, (ii) such Bond may be transferred
only according to the terms of the Standby Agreement and does not carry any
short term rating from Moody's and S & P as long as the Bond is a Bank Bond and
(iii) that such Bond is subject to sale and may cease to be a Bank Bond if
remarketed by the Remarketing Agent.
In connection with any sale of Bank Bonds outside of the remarketing of
the Bank Bonds by the Remarketing Agent, we will provide the Tender Agent with
the written agreement of the purchaser of such Bank Bonds in which the purchaser
(i) acknowledges the terms of the Standby Agreement relating to the Bank Bonds,
(ii) agrees not to sell the Bank Bonds or beneficial interest therein except to
us, pursuant to the remarketing efforts of the Remarketing Agent or to
institutional investors as described above, (iii) provides the address,
telephone number and account number for purposes of notices and payments to the
purchaser of the Bank Bonds and (iv) acknowledges that the short-term ratings on
the 1996 Bonds are not applicable as long as the bond is a Bank Bond.
SALES OF BANK BONDS BY REMARKETING AGENT
The Remarketing Agent may sell Bank Bonds received by the Tender Agent on
our behalf (and any subsequent purchaser of such bonds from us) pursuant to the
Indenture, at a price equal to the aggregate principal amount of such bonds plus
accumulated interest thereon. We and any subsequent purchaser from us may elect
not to sell the Bank Bonds or any portion of them. After any such sale by the
Remarketing Agent or any election not to sell by us or a subsequent purchaser,
the 1996 Bonds will no longer be classified as Bank Bonds and will bear the
weekly interest rate as determined by the Remarketing Agent.
COMMITMENT FEE
The Hospital has agreed to pay to us a commitment fee under the Standby
Agreement of 0.25% per annum commencing on the date on which the Standby
Agreement is delivered to the Tender Agent and continuing for as long as we are
committed to purchase 1996 Bonds tendered for purchase. The amount of the
commitment fee is calculated based on the average daily amount of the Available
Principal and Available Interest Commitments during the relevant commitment
payment period. This fee will be paid in immediately available funds in arrears
on each first Wednesday of December, March, June and September beginning
December 2003.
EVENTS OF DEFAULT; TERMINATION
Each of the following is an event of default under the Standby Agreement:
a) any principal or interest due under the Loan Agreement is not paid
by the Hospital when due and such principal or interest is not paid
by the bond insurer when, as, and in the amounts required to be paid
pursuant to the terms of the Financial Guaranty Insurance Policy
from MBIA Insurance Corporation, which we refer to as the "Policy";
b) nonpayment of the commitment fee or the purchase demand fee (a
nominal amount) payable under the Standby Agreement within five
Business Days after the bond insurer and the Issuer have received
notice from us that the same were not paid when due;
c) nonpayment of any other fees, or any other amount, when due under
the Standby Agreement, if such failure to pay when due shall
continue for seven Business Days after written notice thereof to the
Issuer and the bond insurer by us;
S-4
d) any representation or warranty made by the Hospital under or in
connection with the Standby Agreement or any of the Bond Documents
shall prove to be untrue in any material respect on the date as of
which it was made;
e) the breach by the Issuer of any of the terms or provisions of the
affirmative covenants or negative covenants in the Standby
Agreement;
f) a proceeding is instituted in a court having jurisdiction over the
Hospital, any of its activities or any of its properties seeking an
order for relief, rehabilitation, reorganization, conservation,
liquidation or dissolution in respect of the Issuer under applicable
law and such proceeding is not terminated for a period of 60
consecutive days or such court enters an order granting the relief
sought in such proceeding or the Issuer shall institute or take any
corporate action for the purposes of instituting any such
proceeding; or the Issuer shall become insolvent or unable to pay
its debts as they mature or shall commence a voluntary case under
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law or shall consent to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian or sequestrator (or other similar
official) of the Issuer, or for any substantial part of its
property, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts or claims as
they become due, or shall take any corporate action in furtherance
of any of the foregoing;
g) the Hospital shall default in any payment of principal of or
interest on any obligation for borrowed money (or of any obligation
under conditional sale or other title retention agreement or of any
obligation secured by purchase money mortgage or of any obligation
under notes payable or drafts accepted representing extensions of
credit) payable from the revenues pledge as security under the
Master Trust Indenture, dated as of May 1, 1994, among, inter alia,
the Hospital and the Trustee) beyond any period of grace provided
with respect thereto; or (2) the Hospital shall default in the
performance or observance of any other agreement, term or condition
contained in any agreement under which any such obligation is
created (or if any other event of default thereunder or under such
agreement shall occur and be continuing) and the effect of such
event of default is to cause, or to permit the holder or holders of
such obligation (or a trustee on behalf of such holder or holders)
to cause, such obligation to become due prior to its stated
maturity;
h) the failure on the part of the Hospital to perform or observe any
other term, covenant or agreement contained in the Standby Agreement
or any of the other Bond Documents on its part to be performed or
observed and (a) with respect to any such term, covenant or
agreement contained in the Standby Agreement (other than any of the
terms or provisions of the affirmative covenants or the negative
covenants), any such failure remains unremedied for 30 days; and (b)
with respect to any such term, covenant or agreement contained in
any of the other Bond Documents, any such failure remains unremedied
after any applicable grace period specified in such Bond Document;
i) the Indenture shall terminate or cease to be of full force and
effect, other than as a result of any redemption or defeasance in
full of the 1996 Bonds; or the Hospital shall in writing to the
Trustee claim that its obligations under the Bonds, the Indenture,
any Bond Document or the Standby Agreement are not valid and binding
on the Hospital or repudiate such obligations; or the Hospital shall
initiate any legal proceedings to seek an adjudication that any such
obligations are not valid and binding on the Issuer; or any court or
governmental authority with jurisdiction to rule on the validity of
such obligations shall announce, find or rule that any such
obligations are not valid and binding on the Issuer;
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j) the occurrence of any "Event of Default" as defined in the
Indenture;
k) the occurrence of an Insurer Event of Insolvency as defined in the
Standby Agreement;
l) the President or an Executive Vice President of the bond insurer
shall in writing to the Trustee claim that the Policy with respect
to the payment of principal of or interest on the Bonds is not valid
and binding on the bond insurer, and repudiate its obligations under
the Policy with respect to payment of principal of or interest on
the 1996 Bonds, or the bond insurer shall initiate any legal
proceedings to seek an adjudication that the Policy, with respect to
the payment of principal of or interest on the 1996 Bonds, is not
valid and binding on the bond insurer; or
m) any court or governmental authority with jurisdiction to rule on the
validity of the Policy shall announce, find or rule that the Policy
is not valid and binding on the bond insurer.
"Bond Documents" means the Indenture, the Master Indenture (and all
supplements) referred to in the Official Statement, the Standby Agreement, the
Loan Agreement, the Custody Agreement between AIG-LC and the Tender Agent, the
Remarketing Agreement and the Policy.
Our obligation to purchase 1996 Bonds under the Standby Agreement will be
immediately suspended in the event that an event of default listed under
paragraphs (l) or (m) above should occur. We must notify the Tender Agent, the
Trustee and the Remarketing Agent of the suspension promptly upon obtaining
knowledge of such a default event. Failure to provide such notice, however, will
not affect our right to suspend our obligations to purchase the 1996 Bonds. If a
court with valid jurisdiction then issues a non-appealable judgment that the
Policy is not valid then our obligations will be immediately terminated without
notice or demand. Our obligations to purchase tendered 1996 Bonds will be
reinstated in the event that a court with valid jurisdiction issues a judgment
that the Policy is valid and enforceable. If, however, after three years,
litigation is still pending and no final non-appealable judgment has been
entered by a court with competent jurisdiction then our obligation to purchase
tendered 1996 Bonds will terminate without notice or demand.
Our obligation to purchase tendered 1996 Bonds under the Standby Agreement
will be immediately terminated without notice or demand if an event of default
listed under paragraphs (a) or (k) above should occur. We must give prompt
written notice to the Hospital, the Tender Agent, the Trustee, and the
Remarketing Agent gaining knowledge of the occurrence of such events. Our
failure to provide such notice, however, will not affect the termination of our
obligation to purchase the 1996 Bonds.
In the event of an occurrence of an event of default described in
paragraphs (b) or (c) above, we may give written notice to the Hospital, the
Tender Agent, the Trustee and the Remarketing Agent designating such event as
triggering a mandatory tender of the 1996 Bonds, designating the date on which
our obligations to purchase tendered 1996 Bonds would terminate and requesting a
mandatory tender of the 1996 Bonds. Our obligations under the Standby Agreement
will terminate thirty (30) days after such notice.
Upon the occurrence of any of the events specified above, we will also
have all remedies provided at law or equity, providing however, that we may
terminate our obligations to purchase tendered 1996 Bonds only as specified
above.
THE AIG GUARANTEE
AIG has issued an unconditional and irrevocable guarantee in favor of the
Tender Agent guaranteeing prompt payment of our payment obligations under the
Liquidity Facility Obligations. The Tender Agent may proceed against AIG under
the guarantee whether or not it has proceeded against us with respect to our
obligations. AIG's guarantee will apply to any successors and assigns of the
Hospital and will remain in effect until all of our applicable obligations have
been paid. AIG may apply a set-off of any amounts owed to us by the Tender Agent
against any amounts owed by AIG under the guarantee.
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LIQUIDITY FACILITY OBLIGATIONS
AND
CREDIT FACILITY OBLIGATIONS
OF
AIG LIQUIDITY CORP.
AND
GUARANTEE OBLIGATIONS
OF
AMERICAN INTERNATIONAL GROUP, INC.
We may from time to time enter into standby bond purchase agreements with
issuers, ultimate obligors, Trustees or tender agents in respect of one or more
series of variable rate or short-term municipal bonds, referred to as the Bonds.
The Bonds of each series, including any Bonds remarketed by a remarketing agent
as described herein, will be subject, at the option of the holder of the Bonds,
to tender for purchase and, under certain circumstances, will be subject to
mandatory tender for purchase, at the times and on the terms and conditions set
forth in the Indenture for such Bonds. Under the terms of any such standby bond
purchase agreement, referred to as a Standby Agreement, we will be obligated to
purchase tendered Bonds which have not been remarketed by a remarketing agent as
described in, and subject to any conditions described in, the applicable
Prospectus Supplement. Any tendered Bonds so purchased by us would again be
subject to tender for purchase at the option of the holder if such Bonds are
remarketed by the remarketing agent.
Instead of, or in addition to, entering into a Standby Agreement with
respect to a series of Bonds, we may from time to time issue direct-pay letters
of credit, referred to herein as a Letter of Credit, in respect of such series
of Bonds. Each Letter of Credit will be issued in favor of the Trustee under the
Indenture under which the Bonds are issued for the benefit of the holders of the
Bonds. Pursuant to any such Letter of Credit, the Trustee will be authorized to
draw directly on us from time to time to fund payments of principal of and
interest on the Bonds and, in certain cases, to fund the purchase by the tender
agent of tendered Bonds which have not been remarketed by a remarketing agent in
each case as described in, and subject to any conditions described in, the
applicable Prospectus Supplement. In conjunction with issuing a Letter of
Credit, we and the Issuer of the applicable series of Bonds will enter into a
reimbursement agreement under which we will be entitled to reimbursement of all
credit drawings at such times and on such terms as provided in a reimbursement
agreement and described in the applicable Prospectus Supplement.
Our payment obligations under each Standby Agreement or Letter of Credit
will be unconditionally guaranteed pursuant to a general guarantee relating to
all Standby Agreements or letters of credit or a specific guarantee relating to
the relevant Standby Agreement or Letter of Credit issued by American
International Group, Inc., which we refer to herein as AIG.
The Prospectus Supplement with respect to a Standby Agreement or Letter of
Credit and a guarantee will set forth the title of the relevant series of Bonds,
the name of the Issuer and any insurer, a summary of certain terms of the Bonds
relevant to the operation of the Standby Agreement or Letter of Credit and the
guarantee, and specific terms of such Standby Agreement or Letter of Credit and
guarantee, including whether and under what circumstances the obligations under
the Standby Agreement or Letter of Credit and guarantee may be suspended or
terminated.
This Prospectus and the Prospectus Supplement together constitute an
offering of our obligations under the relevant Standby Agreement, which we refer
to as our Liquidity Facility Obligations or the relevant Letter of Credit which
we refer to as the Credit Facility Obligations, and the obligations of AIG under
the relevant Guarantee, which we refer to as our Guarantee Obligations. We will
refer to our Liquidity Facility Obligations, our Credit Facility Obligations and
the Guarantee Obligations as the Obligations.
This Prospectus and the Prospectus Supplement together do not constitute
an offering of the Bonds related to the Obligations, which have been or will be
offered pursuant to a separate offering
document called an Official Statement. We and AIG undertake no responsibility
with respect to the accuracy or completeness of any Official Statement or any
information set forth therein. The Obligations may not be traded separately from
the Bonds to which they relate. This Prospectus and the Prospectus Supplement
may be delivered at the time of initial issuance of the Bonds of a series or the
remarketing thereof in connection with the replacement by the Obligations of
another liquidity facility or credit facility in effect with respect to such
Bonds and, when appropriately supplemented, if required, may also be delivered
in connection with a remarketing of any Bonds purchased by us or any of our
affiliates.
Payment of principal of and interest on the Bonds of a series to which our
Liquidity Facility Obligations relate is solely the obligation of the Issuer of
the Bonds and is not insured or guaranteed by us, AIG or any affiliate of either
us or AIG. Although Credit Facility Obligations issued by us with respect to a
series of Bonds will serve to support payment of principal of and interest on
such Bonds, payment of such amounts will be primarily the obligation of the
Issuer, as described in the Official Statement for such Bonds, notwithstanding
the existence of such Credit Facility Obligations.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FOR NORTH CAROLINA RESIDENTS ONLY
THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA HAS NOT APPROVED
OR DISAPPROVED OF THE OFFERING, NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
THIS PROSPECTUS MAY NOT BE DELIVERED UNLESS ACCOMPANIED BY THE PROSPECTUS
SUPPLEMENT.
The date of this Prospectus is September 19, 2003
-2-
NOTICE TO INVESTORS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT OR INFORMATION CONTAINED IN DOCUMENTS WHICH YOU ARE
REFERRED TO BY THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED
IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE ARE OFFERING TO SELL THE
SECURITIES ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS
ACCURATE ONLY AS OF THE DATE ON THE FRONT OF THOSE DOCUMENTS, REGARDLESS OF THE
TIME OF DELIVERY OF THE DOCUMENTS OR ANY SALE OF THE SECURITIES.
WHERE YOU CAN FIND MORE INFORMATION
We are required to file annual, quarterly and current reports, proxy
statements and other information with the SEC. These reports, proxy statements
and other information can be inspected and copied at:
SEC Public Reference Room
450 Fifth Street, N.W.
Washington, D.C. 20549
Please call the SEC at 1-800-SEC-0330 for further information.
AIG's filings are also available to the public through:
- The SEC web site at http://www.sec.gov
- The New York Stock Exchange
20 Broad Street
New York, New York 10005
AIG's common stock is listed on the NYSE under the symbol "AIG."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information AIG files
with the SEC, which means that we can disclose important information to you by
referring you to those documents. When post-effective amendment no. 2 to the
Registration Statement of which this prospectus is a part became effective, the
following documents were incorporated by reference.
- Annual report on Form 10-K for the year ended December 31, 1995.
- Quarterly report on Form 10-Q for the quarter ended March 31, 1996.
All of AIG's filings made with the SEC under Sections 13(a), 13(c), 14, or
15(d) of the Securities Exchange Act of 1934 since the effective date of
post-effective amendment no. 2 to the Registration Statement have been
incorporated by reference in this prospectus and all of AIG's future filings
with the SEC under such sections will be incorporated by reference until the
termination of the offering of the Obligations. The information incorporated by
reference in this prospectus is considered to be part of this prospectus, and
later information that AIG has filed or files in the future with the SEC will
automatically update and supersede that information as well as the information
included in this prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement, of which this Prospectus is
a part, and exhibits thereto which AIG-LC and AIG have filed with the Commission
under the Securities Act of 1933, to which reference is hereby made.
-3-
We will provide without charge a copy of these filings, other than any
exhibits unless the exhibits are specifically incorporated by reference into
this prospectus.
Requests for such documents should be directed to AIG's Director of
Investor Relations, 70 Pine Street, New York, New York 10270, telephone (212)
770-6293.
This Prospectus constitutes a prospectus with respect to the Obligations
of AIG-LC and AIG specified in the Prospectus Supplement. No Registration
Statement has been filed under the 1933 Act with respect to the Bonds specified
in the Prospectus Supplement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
-4-
DESCRIPTION OF THE OBLIGATIONS
GENERAL
We may enter or issue Standby Agreements or letters of credit from time to
time the obligations of which will be guaranteed by AIG, with respect to one or
more series of Bonds specified in the applicable Prospectus Supplement. The
Bonds of each series and any municipal Bond insurance policy purchased by the
Issuer with respect to such Bonds have been or will be described in a separate
Official Statement of the Issuer. We and AIG undertake no responsibility with
respect to the accuracy or completeness of any Official Statement or any
information set forth therein.
Our obligations under each Standby Agreement or Letter of Credit and the
obligations of AIG under each guarantee will rank equally with all other of our
and AIG's general unsecured and unsubordinated obligations. The Obligations are
not being issued pursuant to an indenture.
In connection with each Standby Agreement or Letter of Credit, AIG will
agree to provide, or cause to be provided, by means of capital contributions,
purchases of assets, loans or otherwise, funds to us to the extent necessary to
enable us to meet our obligations under the Standby Agreement or Letter of
Credit. Any such agreement to provide or cause to be provided funds will be
solely for the benefit of and enforceable by us and AIG.
AIG depends on its subsidiaries for cash flow in the form of loans,
advances and dividends. Some AIG subsidiaries, namely those in the insurance
business, are subject to regulatory restrictions on the amount of dividends
which can be paid to AIG. These restrictions vary by state. For example, unless
permitted by the New York Superintendent of Insurance, general insurance
companies domiciled in New York may not pay dividends to shareholders which in
any twelve month period exceed the lesser of 10 percent of the company's
statutory policyholders' surplus or 100 percent of its "adjusted net investment
income," as defined. Generally, less severe restrictions applicable to both
general and life insurance companies exist in most of the other states in which
AIG's insurance subsidiaries are domiciled. Certain foreign jurisdictions have
restrictions which generally cause only a temporary delay in the remittance of
dividends. There are also various local restrictions limiting cash loans and
advances to AIG by its subsidiaries. Largely as a result of the restrictions,
approximately 72 percent of consolidated capital funds were restricted from
immediate transfer to AIG at December 31, 2002.
Each Standby Agreement or Letter of Credit will be entered into or issued
at the same time of or after the original issuance of the Bonds described in the
Prospectus Supplement, in either case as set forth in the Prospectus Supplement,
and will expire on the stated termination date set forth in the Prospectus
Supplement unless extended or earlier terminated upon the conditions described
in the Prospectus Supplement.
The Prospectus Supplement will describe the specific terms of the
Obligations in respect of which this Prospectus is being delivered, including
among other things: (1) the timing, terms and method of purchase of Bonds to
which the Liquidity Facility Obligations relate under the Standby Agreement; (2)
the timing, terms and method of making credit drawings to which Credit Facility
Obligations relate under the Letter of Credit and the timing, terms and method
of reimbursing us for such credit drawings under the related reimbursement
agreement; (3) whether and under what circumstances such Obligations will be
terminable without, prior to, or after a mandatory tender for purchase or
acceleration of the related Bonds; (4) any limitations on our rights to resell
Bonds we purchase; (5) the commitment fee payable to us; and (6) any other
relevant terms of the Standby Agreement, the Letter of Credit, the reimbursement
agreement and the guarantee, as the case may be. The term of each Standby
Agreement or Letter of Credit shall be set forth in the Prospectus Supplement,
and generally will be at least 360 days, unless the final maturity of the Bonds
occurs prior to the end of such 360 day period, in which case the term of the
Standby Agreement or Letter of Credit would end on the date of such final
maturity of the Bonds as described in the next section of this Prospectus.
-5-
The Prospectus Supplement will also specify the following terms of the
Bonds to which the Obligations relate: (1) the Issuer and title of such Bonds;
(2) the aggregate principal amount of such Bonds; and (3) certain other terms of
the Bonds or any insurance policy relevant to the operation of the Standby
Agreement, the Letter of Credit, the reimbursement agreement or the guarantee.
Payment of principal of and interest on the Bonds of a series to which our
Liquidity Facility Obligations relate is solely the obligation of the Issuer and
is not insured or guaranteed by us, AIG, or any affiliate of us or AIG. Although
Credit Facility Obligations issued by us with respect to a series of Bonds will
serve to support payment of principal of and interest on such Bonds, payment of
such amounts will be primarily the obligation of the Issuer, as described in the
Official Statement for such Bonds, notwithstanding the existence of such Credit
Facility Obligations. Under certain circumstances, the Obligations with respect
to the purchase of Bonds of any series may be terminated or suspended upon an
Event of Default (as defined in the relevant Standby Agreement or reimbursement
agreement and described in the Prospectus Supplement).
Each holder of Bonds will be responsible for acting individually with
respect to, among other things, the giving of notices, responding to any
requests for consents, waivers or other amendments pertaining to the Bonds,
enforcing covenants and taking action upon a default.
During the period that the Bonds are owned by us or by a qualified
purchaser from us (including AIG), such Bonds will bear interest at a rate based
on a reference rate or an index as described in the Prospectus Supplement,
subject in certain cases to a maximum rate, or will bear interest as otherwise
described in the Prospectus Supplement. We or our affiliates may hedge our
interest rate exposure in connection with Bonds we purchase, by entering into
interest rate swaps or similar transactions that would have the effect of
converting interest on the purchased Bonds into a LIBOR based rate (subject in
certain cases to no such maximum rate or to a different maximum rate). Unless
otherwise set forth in the Prospectus Supplement, the remarketing agent will
have a continuing obligation to use its best efforts to find purchasers for any
Bonds owned by us or a qualified purchaser who purchased the Bonds from us.
The following descriptions under "Tender of Bonds," "The Standby
Agreements," "The Letters of Credit," "Amount of Commitment" and "The
Guarantees" are general in nature and qualified in their entirety by reference
to, and may be superseded to the extent described in, the Prospectus Supplement
relating to any particular series of Bonds.
TENDER OF BONDS
Tender Option
The Bonds of each series will be subject, at the option of the holder of
the Bonds, to tender for purchase with funds available to the tender agent. The
terms of the Bonds of a series may permit such tenders at any time upon notice
or at specified times relating to the reset of the interest rate with respect to
the Bonds of such series. On the date on which the Bonds of any series are
issued and on each interest reset date for such Bonds, in general, the
remarketing agent will determine the interest rate for the Bonds which is
necessary to remarket tendered Bonds at a price equal to 100% of the principal
amount thereof plus any accrued interest. The Bonds will bear interest at such
rate for the next succeeding interest rate period. Tenders of the Bonds will be
made to the tender agent for purchase at a price equal to 100% of the principal
amount thereof plus any accrued interest to the date of tender (the "purchase
price").
Mandatory Tender
Bonds with respect to which the interest rate period has been changed or
which have been converted to a fixed rate may be subject to mandatory tender to
the tender agent for purchase. In addition, the Bonds may be subject to
mandatory tender for purchase immediately prior to the termination or
expiration, and in some circumstances the replacement of the relevant Standby
Agreement or Letter of
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Credit. Unless otherwise provided in the Prospectus Supplement, if such Bonds
are not delivered when due for tender, they will nevertheless be deemed to be
tendered and purchased at the purchase price designated relevant in the
Indenture with funds available to the tender agent.
THE STANDBY AGREEMENTS
The following paragraphs under the caption "The Standby Agreements" apply
to any series of Bonds with respect to which we have entered into a Standby
Agreement.
Method of Purchase of Bonds by AIG-LC
On the purchase date for the Bonds of any series, the tender agent or the
Trustee as set forth in the Prospectus Supplement shall give us notice of the
aggregate purchase price of that portion of the tendered Bonds of such series
that remain unsold. After we receive such notice, we will (unless our
obligations have been terminated or suspended and subject to any conditions,
including the maximum amount we are committed to provide, described in the
Prospectus Supplement) by the time set forth in the Prospectus Supplement, make
the requested amount available to the party so designated in the Prospectus
Supplement, in immediately available funds or such other funds as shall be
permitted as described in the Prospectus Supplement. As soon as practicable
thereafter, but in any event not later than the time set forth in the Prospectus
Supplement on each purchase date, the tender agent will be required under the
applicable Indenture to purchase such Bonds, for our account, at the purchase
price. The tender agent will be required to remit to us such funds which are not
so used to purchase tendered Bonds.
The Indenture will in general provide that if sufficient funds are duly
deposited on such date, then such Bonds shall be deemed to have been purchased
for all purposes under the related Indenture and that thereafter such holder
will have no further rights under the related Indenture, except to receive the
purchase price from the funds so deposited upon surrender thereof. Neither we
nor AIG will have any liability to a holder for the failure by the tender agent
to apply funds received by it to the purchase price of the related Bonds.
Events of Default and Nature of Obligations
Unconditional Obligations
If the Liquidity Facility Obligations are unconditional, as described in
the Prospectus Supplement, the occurrence and continuance of certain Events of
Default (as defined in the Standby Agreement and described in the Prospectus
Supplement) shall, except as otherwise described in the Prospectus Supplement,
give us the right to terminate our obligations under the Standby Agreement upon
written notice to the Issuer and tender agent specifying a date on which the
Standby Agreement will terminate. In such event, a mandatory tender of the Bonds
may take place pursuant to the Indenture prior to the date specified for
termination and we will be obligated, subject to the terms and conditions of the
Standby Agreement and except as otherwise described in the Prospectus
Supplement, to provide funds for the payment of the purchase price of tendered
Bonds that are not remarketed.
Conditional Obligations
If the Liquidity Facility Obligations are conditional, as described in the
Prospectus Supplement, the occurrence and continuance of certain Events of
Default will, except as otherwise described in the Prospectus Supplement, result
in either immediate suspension or termination of our obligations to purchase
without further action by us or give us the right to suspend or terminate its
obligations under the Standby Agreement. In such event, except as otherwise
described in the Prospectus Supplement, either no mandatory tender of Bonds will
take place prior to such a suspension or termination or if a mandatory tender
does occur the Standby Agreement will have terminated prior to the purchase
date. Except as otherwise described in the Prospectus Supplement, neither we nor
AIG will be obligated to provide funds
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for the payment of the purchase price of tendered Bonds during such a suspension
or following such termination.
Obligation of Tender Agent to Obtain Funds Under the Standby Agreement
The tender agent will be entitled under the Standby Agreement to demand
funds for the payment of purchase price and the Standby Agreement will expressly
provide that the Standby Agreement is for the benefit of the tender agent. The
Indenture will provide that the tender agent is obligated to take such actions
as may be necessary to obtain immediately available funds on each purchase date
under the Standby Agreement sufficient in amount to enable the tender agent to
pay the purchase price on such purchase date.
THE LETTERS OF CREDIT
The following paragraphs under the caption "The Letters of Credit" apply
to any series of Bonds with respect to which AIG-LC has issued a Letter of
Credit.
Method of Payment of Credit Drawings by AIG-LC
The Trustee shall give to us notice of credit drawings from time to time
up to the initial amount stated in the Letter of Credit. After receipt of such
notice, we shall (unless our obligations have been terminated or suspended and
subject to any conditions, including the maximum amount we are obligated to
provide, described in the Prospectus Supplement), by the time set forth in the
Prospectus Supplement, make such amount available to the Trustee, in immediately
available funds or such other funds as shall be permitted as described in the
Prospectus Supplement. The Trustee will apply such credit drawings to pay
principal of and interest on the Bonds or to purchase at the purchase price
tendered Bonds which have not been remarketed by a remarketing agent. If the
credit drawing is made to purchase tendered Bonds, the Trustee will be required
to remit to us such funds which are not so used to purchase tendered Bonds.
Neither we nor AIG will have any liability to a holder for the failure by
the Trustee or any other person to apply funds received by us or AIG under the
Letter of Credit to payments of principal of, interest on or purchase price of,
as the case may be, the related Bonds.
Method of Reimbursement of Credit Drawings
Pursuant to the reimbursement agreement, we will be entitled to
reimbursement by the Issuer of the Bonds of all credit drawings at such times
and on such terms as provided in the reimbursement agreement and described in
the Prospectus Supplement. If any such reimbursement obligation of an Issuer is
not paid on the same day on which credit drawings are made, the Issuer will be
obligated to pay us interest on the unpaid amount thereof.
Events of Default
The default by the Issuer of its obligation to reimburse us for credit
drawings, or the occurrence and continuance of certain other events of default
(as provided in the relevant reimbursement agreement and described in the
Prospectus Supplement), shall, except as otherwise described in the Prospectus
Supplement, give us the right to terminate our obligations under the Letter of
Credit upon written notice to the Issuer or the Trustee specifying a date on
which the Letter of Credit shall terminate. In such event, a mandatory tender or
acceleration of the Bonds may take place pursuant to the Indenture prior to the
date specified for termination and we will be obligated, subject to the terms
and conditions of the Letter of Credit and except as otherwise described in the
Prospectus Supplement, to make credit drawings available to the Trustee for the
acceleration of the Bonds or the payment of the purchase price of tendered
Bonds.
-8-
Obligation of Trustee to Obtain Funds Under the Letter of Credit
The Trustee will be entitled under the Letter of Credit to draw funds for
the payment of principal of and interest on the Bonds and, in certain cases, to
purchase tendered Bonds which have not been remarketed by a remarketing agent,
and the Letter of Credit will expressly provide that the Letter of Credit is for
the benefit of the Trustee. The Indenture will provide that the Trustee is
obligated to make credit drawings as necessary to obtain immediately available
funds for the payment of principal of and interest on the Bonds or to purchase
tendered Bonds which have not been remarketed by a remarketing agent, in each
case as such amounts become due and payable.
AMOUNT OF COMMITMENT
Except as otherwise described in the Prospectus Supplement, each Standby
Agreement and Letter of Credit will have an initial stated amount which is equal
to the sum of (a) the aggregate principal amount of the Bonds and (b) an amount
at least equal to the interest that would accrue on the Bonds during the period
specified on the Prospectus Supplement, computed as though the Bonds bore
interest at the maximum rate of interest permitted to be borne by the Bonds for
such period as set forth in the related Prospectus Supplement.
Upon the purchase of any Bonds under a Standby Agreement, and upon the
payment and reimbursement of credit drawings under a Letter of Credit, the
initial stated amount described above will be adjusted as described in the
Prospectus Supplement.
THE GUARANTEES
The Liquidity Facility Obligations and Credit Facility Obligations will be
unconditionally guaranteed by AIG pursuant to a guarantee. The applicable
guarantee will terminate upon the termination of our obligations pursuant to the
relevant Standby Agreement or Letter of Credit.
AIG LIQUIDITY CORP.
We were incorporated on June 29, 1992 in the State of Delaware. All
outstanding capital stock of AIG-LC is owned by AIG. AIG-LC's principal
executive offices are located at 50 Danbury Road, Wilton, Connecticut
06897-4444, Telephone No. (203) 222-4700.
Our business consists of providing liquidity for the payment of the tender
price of certain variable rate municipal securities through Standby Agreements,
providing credit support for the payment of principal of, interest on and tender
price of certain variable rate municipal securities through Standby Agreements,
Letters of Credit and certain related activities.
AMERICAN INTERNATIONAL GROUP, INC.
AIG, a Delaware corporation, is a holding company which through its
subsidiaries is engaged in a broad range of insurance and insurance-related
activities in the United States and abroad. AIG's primary activities include
both general and life insurance operations. Other significant activities include
financial services, and retirement savings and asset management.
AIG's principal executive offices are located at 70 Pine Street, New York,
New York 10270, and its telephone number is 212-770-7000.
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The following table sets forth the historical ratios of earnings to fixed
charges of AIG and its consolidated subsidiaries for the periods indicated:
Six months
Ended
June 30, Year Ended December 31,
----------- -------------------------------
2003 2002 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed
charges 4.05 3.97 3.10 2.92 3.59 3.96 3.57
==== ==== ==== ==== ==== ==== ====
The ratios shown are significantly affected as a result of the inclusion
of the fixed charges and operating results of AIG Financial Products Corp. and
its subsidiaries (AIGFP). AIGFP structures borrowings through guaranteed
investment agreements and engages in other complex financial transactions,
including interest rate and currency swaps. In the course of its business, AIGFP
enters into borrowings that are primarily used to purchase assets that yield
rates greater than the rates on the borrowings with the intent of earning a
profit on the spread and to finance the acquisition of securities utilized to
hedge certain transactions. The pro forma ratios of earnings to fixed charges,
which exclude the effects of the operating results of AIGFP, are 6.99 and 6.05
for the second quarter and 6.62 and 6.26 for the first six months of 2003 and
2002 respectively, and 4.46, 4.16, 5.06, 5.51, and 4.76 for the years 2002,
2001, 2000, 1999 and 1998, respectively. As AIGFP will continue to be a
subsidiary, AIG expects that these ratios will continue to be lower than they
would be if the fixed charges and operating results of AIGFP were not included
therein.
Excluding $900 million with respect to the World Trade Center and related
losses and $2.02 billion with respect to the acquisition, restructuring and
related charges, the ratio of earnings to fixed charges was 3.62 for 2001.
USE OF PROCEEDS
In consideration for issuing the Liquidity Facility Obligations or the
Credit Facility Obligations, we will receive fees from the Issuer described in
the relevant Prospectus Supplement. We expect that any such fees so received
will be transferred to AIG or a subsidiary of AIG by means of dividends, loans
or otherwise and used by AIG or such subsidiary for general corporate purposes.
Except as otherwise described in the Prospectus Supplement relating to a
particular series of Bonds, AIG will not receive separate fees from the Issuer
of such Bonds in consideration for issuing the Guarantee Obligations.
PLAN OF DISTRIBUTION
The Obligations will be offered from time to time in connection with the
initial issuance of the Bonds of any series or the remarketing thereof in
connection with the replacement by the Obligations of another liquidity facility
or credit facility in effect with respect to such Bonds. The Obligations may
also be offered in connection with Bonds bought by us. The Obligations may not
be traded separately from the Bonds specified in the Prospectus Supplement. Such
Bonds have been or will be offered pursuant to a separate Official Statement
through any underwriters or agents named therein. We and AIG undertake no
responsibility with respect to the accuracy or completeness of any Official
Statement or any information set forth therein.
VALIDITY OF OBLIGATIONS
Unless we state otherwise in any prospectus supplement, the validity of
the securities will be passed upon for us by Sullivan & Cromwell LLP, New York,
New York or by Kathleen E. Shannon, Senior Vice President, Secretary and Deputy
General Counsel of AIG. Partners of Sullivan & Cromwell LLP involved in the
representation of AIG beneficially own approximately 11,360 shares of AIG common
stock. Ms. Shannon is regularly employed by AIG, participates in various AIG
employee benefit plans under which she may receive shares of AIG common stock
and currently beneficially owns less than 1% of the outstanding shares of AIG
common stock.
-10-
EXPERTS
The consolidated financial statements of AIG and its subsidiaries and the
related financial statement schedules included in its Annual Report on Form 10-K
for the year ended December 31, 2002, incorporated herein by reference, are so
incorporated in reliance upon the report of PricewaterhouseCoopers, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
We have included or incorporated by reference in this prospectus
statements that may constitute "forward-looking statements" within the meaning
of the safe harbor provisions of the Private Securities Litigation Reform Act
off 1995. These forward-looking statements are not historical facts but instead
represent only our belief regarding future events, many of which, by their
nature, are inherently uncertain and outside of our control. It is possible that
our actual results may differ, possibly materially, from the anticipated results
indicated in these forward-looking statements.
Information regarding important factors that could cause actual results to
differ, perhaps materially, from those in our forward-looking statements is
contained under the caption "Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Cautionary Statement Regarding
Forward-Looking Information" in AIG's Annual Report on Form 10-K for the year
ended December 31, 2002, which is incorporated in this prospectus by reference.
See "Where You Can Find More Information" above for information about how to
obtain a copy of this annual report.
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