NEW YORK (

TheStreet

) --

American International Group

(AIG) - Get Report

has extended its offer to exchange 74.5 million equity units until Tuesday evening as it prepares for a massive conversion of the U.S. Treasury Department's preferred stake.

The insurance giant is offering 0.1 share of common stock plus $3.27 in cash for each equity unit.

The exchange offer was originally set to expire just before midnight on Wednesday evening. As of that afternoon, 42.6 million units, or 57% of those available for exchange, had been tendered.

The trade is part of AIG's plan to exit its once-enormous federal bailout. The company is giving the Treasury a 92% stake via common stock in order to repay its remaining $50 billion in debt. The government will get 1.655 billion shares of common stock, to be wound down gradually over the next couple of years.

AIG shares closed at $41.78 on Wednesday, down from a 52-week high above $45 hit earlier this month.

-- Written by Lauren Tara LaCapra in New York

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