The price for the US Government’s sale of shares in AIG has been set at $US29 ($27.39) per share, marginally above the Government’s break-even price of $US28.73 ($27.13).

The sale of 300 million shares, 200 million of which are owned by the Treasury, is part of the Government’s staged exit from AIG after it bailed the insurance giant out during the global financial crisis in 2008.

The additional 100 million shares are new stock being issued by AIG.

The sale will raise $US8.7 billion ($8.2 billion) and will see the Government cut its 92% stake in AIG by 15%. 

Under the terms of the offer, the Government can also sell an additional 45 million shares in the next 30 days if the offer is oversubscribed.

AIG says it will use $US550 million ($519 million) of its proceeds from the offer to fund a legal settlement, with the rest going to “general corporate purposes”.

A sale worth up to $US25 billion ($23.6 billion) had previously been forecast, but AIG’s falling share price – which has halved since the start of 2011 – has stymied the Government’s plans for a quick exit.

It is expected to sell off the rest of its holdings in AIG over the next two years.