NEW YORK CITY-AIG said in a regulatory filing Wednesdayafternoon it had agreed to retire its line of credit with theFederal Reserve Bank of New York, on which it owed about $21billion. The insurance giant, which received federal bailoutstotaling more than $175 billion in 2008, will use proceeds from thesale of subsidiary American Life Insurance Co. and an IPO on AIAGroup Ltd., to repay the line. Both are overseas operations; theALICO sale closed early last month.

Additionally, the recapitalization agreement signed by AIG, theNew York Fed, the Treasury Department and the trustees of the AIGCredit Facility Trust calls for a public offering of stockcurrently held by the Treasury. The sale would take place in thefirst half of 2011 and would seek to raise a minimum of $15billion. It would be the first of several such offerings.

The Treasury would have the right to set all terms andconditions of any AIG stock offering until its share of the stockfalls below 33%, according to AIG’s SEC filing Wednesday. Untilthat 33% threshold is reached, the federal government would also beable to order AIG to hold up to two stock offerings per year. Forits part, AIG would be able to sell up to $3 billion in new shares,and possibly an additional $4 billion if approved by theTreasury.