02 December 2011

Famous Corporate Bailouts

Corporations feel that they are too big to default, but the economic downswing has seen many a giant corporations reeling under the global financial losses and getting into trouble. The financial bailout is an attempt to revive the failing corporate to overcome a financial domino effect in case the organization collapses. Here are the famous corporate bailouts over the history.  


Apple



apple, microsoft, steve jobs, corporate, finance, bailoutIn 1997, Apple was bailed out by its so-called arch rival Microsoft with an investment of $150 million. The bailout saw Microsoft making the investment in return for non-voting shares and an assurance that Microsoft would support Office for Mac for the next five years. In return, Apple agreed to drop its lawsuit against Microsoft of the alleged copying of the look and feel of Mac OS for the Windows apart from making Internet Explorer the default browser on its computers.










AIG



AIG, U.S., us, government, goldman, goldman sachsAmerican International Group was bailed out by the Federal Reserve after a credit-liquidity facility was created to allow AIG to draw upto $85 billion. The economic downswing, which swept the global financial markets, pushed AIG, the largest insurance company in the world, towards bankruptcy. In early November, the U.S. Treasury announced to purchase $40 billion in the newly issued preferred stock. The Federal officials claimed that the investment would reduce the total exposure to AIG from $152 billion to $112 billion. AIG went into controversy post the bailout as officials stated that the benefits of the bailouts went to the banks, while the taxpayers had to suffer the costs.



 

Citigroup



citi, citibank, citigroup, finance, corporate, bailoutCitigroup was bailed out by the U.S. government in 2008 at a stake of $20 billion, apart from guaranteeing hundreds of billions in risky assets. The bailout came from the Treasury Department’s $700 billion financial bailout package. The bailout followed the $25 billion received by Citigroup in which the government received an ownership stake. The bailout also saw the Treasury Department and the Federal Deposit Insurance Corporation (FDIC) guaranteeing upto $306 billion of risky loans and securities which were backed by commercial and residential mortgages.






Goldman Sachs



goldman, AIG, goldman sachs, coroprate, bailoutGoldman Sachs’s Global Equity Opportunity Fund partnered with its investors to invest $3 billion into the corporate, which was in troubled waters owing to the loss of 30 percent of its value. Goldman Sachs pumped in $2 billion, while its investors Maurice Greenberg’s C.V. Starr & co. and Eli Broad put in the remaining $1 billion. Overall, Goldman also received $12.9 billion from the U.S. government in the end of 2008 as payment towards then-worthless securities that Goldman held in AIG.










Chrysler



chrysler, corporate, bailout, finance, white house, bailout actIn 1979, Chrysler received a $1.5 billion investment by the Congress following a loss of $1 billion by Chrysler. The Bailout act required Chrysler to raise $2 billion on its own through concessions to be arranged from workers and suppliers to finance its operations. In 1983, Chrysler was able to repay the loan and returned to profitability, and it also made the Treasury richer by $350 million. The automobile crisis of 2008, saw Chrysler in troubled waters and the U.S. government announced a $13.4 billion rescue loan for the American automakers, including Chrysler. In 2009, the White House agreed to pay an additional $6 billion to Chrysler to finalize an alliance with automaker Fiat.