AIG board nears approval of rescue plan: report

(Reuters) - American International Group Inc (AIG.N) board is nearing approval of a rescue plan overhaul, the Wall Street Journal said on Sunday.

Highlights:

* U.S. government expected to cancel bulk of AIG's credit default swap agreements via a massive purchase of underlying real estate assets - WSJ citing sources

* U.S. government expected to buy $40 billion in preferred AIG shares through U.S. treasury's troubled asset relief program - WSJ

* Plan expected to include backstop of AIG's securities lending portfolio - WSJ

* As part of plan, U.S. will end up with total exposure of some $150 billion in investments - WSJ

* Under plan, government would replace original $85 billion loan with a 2-year duration with a $60 billion loan with a 5-year duration - WSJ

* Interest on loan would drop from 8.5 percent plus 3-month libor interest-rate benchmark to 3 percent plus libor - WSJ