Insurance giant American International Group (AIG), which has received more than $120 billion in federal bailout aid, on Wednesday signed an agreement detailing its plan to repay its government loans. According to a Securities and Exchange Commission filing, the company will use $27 billion -- gained from the sale of two of its U.S. divisions -- to pay down a government credit line that totaled about $20 billion at the end of September.

The filing also outlined the Treasury's control over the sale of AIG stock. The department, which now owns 80% of the company -- and will end up with a 92% stake when it converts its preferred stock into common stock -- will be able to dictate the conditions of any AIG stock sale until it owns less than 33% of the company.

The news came after The Wall Street Journal reported earlier Wednesday that the Treasury may sell at least $15 billion worth of its AIG stock by the end of the first quarter of 2011. That would represent more than half of AIG's total market value of approximately $28 billion.

The government has been looking for exits that will enable it to recoup the billions of bailout dollars it has doled out to various companies starting early last year. Earlier this week, the Treasury said it would sell its remaining 2.4 billion Citigroup (C) common-stock shares, together worth about $10 billion, after already selling 5.3 million of the 7.7 billion shares it has held since July 2009.

AIG shares fell 3.9% to $42.22 in regular trading Wednesday.


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