Business

AIG SENDS AN S.O.S.

American International Group early today was feverishly trying to put together a plan to raise enough cash to ensure that the struggling insurance giant avoids bankruptcy.

AIG, which has seen its shares sink nearly 80 percent this year, is pursuing multiple tacks, all with an eye toward raising enough cash to shore up its capital base and protect its credit rating, which is on the brink of being downgraded two or three notches, according to sources familiar with the matter. Such a downgrade would be a death blow to AIG, as the company’s creditworthiness is key to its insurance business.

Sources said AIG executives met over the weekend with top New York state officials, including Gov. Paterson and insurance and banking regulators, with an eye toward obtaining permission to liquidate assets, including Manhattan real estate, in order to raise cash.

AIG is also expecting to unveil a plan today that outlines a massive restructuring that could include the sale of multiple lines of business. The company’s goal is to raise at least $10 billion in capital to keep itself afloat.

One option that appears no longer on the table is accepting capital from private-equity firms. Yesterday afternoon, sources were telling The Post that AIG had held talks with private-equity titans Kohlberg Kravis Roberts & Co., TPG and J.C. Flowers & Co. about an infusion of cash.

Flowers late last week had also been mentioned as a candidate to buy some of AIG’s most toxic assets for pennies on the dollar as the insurer looked to spin off poorly performance assets.

However, by the end of the day yesterday AIG’s board had shot down that idea, according to The Wall Street Journal, and was instead mulling asking the Federal Reserve for help.

AIG’s desperate search for a new lease on life comes after AIG shares tanked 31 percent on Friday, and amid broader worries that if the firm doesn’t have a plan in place to fix itself, it could crumble.

Those fears have been exacerbated by the torrent of bad news coming out of Wall Street over the weekend, most notably the failure of federal regulators to put together a rescue plan for Lehman Brothers. That missed goal means the venerable Wall Street bank faces liquidation.

As The Post first reported on Sept. 4, AIG hired JPMorgan Chase as an adviser to explore spinning off the insurer’s badly performance assets from the better performing ones.