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Peter Kaufman, Gordian Group president, on China helping AIG pay back its bailout, and what this means for taxpayers.
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-- well AIG is selling an 80% stake in its aircraft leasing business to a group of Chinese financial firms -- just over four billion dollars making that deal.
China's -- -- the largest acquisition of the US company now the sale.
Well certainly help AIG continue to pay back it's a 180 plus billion dollar government -- out.
But isn't a good deal for US taxpayers -- joining us now Peter Kaufman president of the -- -- to thank you so much for for being here okay.
Is this a good deal for the taxpayers.
Well I think there's there's three parts this whole issue one as you know the our analysts see transaction itself.
Which is the impact and -- -- -- -- the and it probably sets and the larger issue to me is the theme of China buying North American assets.
So well absent of the leasing company is huge -- the -- it's this the second largest leasing company in the world aircraft leasing company after GE.
And is -- attractive because of the emerging.
Amount of travelers out of in Asia absolutely -- China and Indonesia or going to be you know 40% of the aircraft.
Market through 2126.
There it's gonna have.
Needs the border 500 airplanes each but I is gonna give them a big toe hold.
So it's a great deal for them.
It's not a particularly robust.
Valuation for AIG but I don't think they care that much they -- down most of what they -- he has his government the government is down.
To about a 15% stake in AIG and had -- value this transaction which is about five point three billion dollars.
-- -- and half of the value of the stock.
US also it's not such a bad deal -- even though -- of the book -- the accounting book value of this deal is only.
About it's materially off a 100% is probably somewhere between fifty and 65%.
Okay and other transactions and leasing have been for more more robust prices but the big issue to me the -- that you're starting to see is.
China is buying North American assets they've just been well you know not debt -- well.
They're not satisfied with that they.
Just -- for fifteen billion dollars Canadians energy company next some they're buying out of bankruptcy subject to government approval.
12 -- 123 systems which is the electric battery maker that's -- bankruptcy that was funded partially by the US government.
The provides looked better is -- this through the car the electric car company -- the buying efforts are under 56 million dollars.
And bankruptcy is a backdoor way to controlling this stuff you can do through sale which requires US government approval.
But if you do through plan of reorganization you don't necessarily need government approval.
And would become a problem with government approval on some of these things well I think the government has said that we're going to not let some of the Chinese companies if you way yep and CTI don't get in the Telecom there are sensitivities here I'm afraid I'm a free market guy yet so are like you know we we like the free markets but I think -- there's got to be some sensitivities.
With the it would with what China.
-- can always play by the rules let's be honest.
Full foot you know I mean we've we've been almost friendliest trading partners are very important but -- not relations of -- always being great and they do own.
A lot of our debt that's true.
So we should be nice to them because obviously there helping us out free markets but be -- -- -- my perspective do you expect a lot more than saw their elective bargains out there that will be attractive to Chinese investors I think there are in the I think that there will be -- said they're getting we're pretty attractive price compared to book for this -- -- prefer -- so you think this is a deal getting back AIG makes sense all consumed.
Very good all right but almost paid off that bill for the government to the taxpayers that's good news is well you to thank you something it -- -- thank you.
And then China -- -- the snake in the area.
I read a newspaper business is it what it used to be thought well that's got billionaire Michael Bloomberg from buying one of his favorite papers we're gonna have that story next have a but as we do every -- this sounds like -- get -- -- at thirty year treasuries the ten year -- down a basis point one point 62% as for the.
Thirty year treasury unchanged two point 80.
