Citigroup Seeks Authorization for 60 Billion Shares

Discussion in 'Wall St. News' started by MrDODGE, Jun 3, 2009.

  1. By Josh Fineman and Bradley Keoun

    June 3 (Bloomberg) -- Citigroup Inc., the third-largest U.S. bank by assets, will seek authorization from investors to increase its outstanding common shares to as much as 60 billion, from a current limit of 15 billion.

    The new amount was disclosed today by the New York-based company in a filing with the Securities and Exchange Commission. Citigroup said in March it would seek an authorization of between 40 billion and 60 billion shares.

    The bank needs investors to approve the share-count increase to convert as much as $58 billion of preferred stock into common, part of Chief Executive Officer Vikram Pandit’s effort to bolster equity following the Federal Reserve’s “stress tests” last month.

    Shares outstanding, at 5.39 billion now, would increase to as much as 22.8 billion under the conversion plan.

    The filing may bring Citigroup a step closer to formally initiating the exchange offer, announced more than three months ago. On April 17, the bank said it would delay the offer until the Fed completed the stress tests. After learning of the Fed’s requirements, Citigroup expanded the offer from an original target of $52 billion.

    The delays have frustrated investors who bought preferred stock in anticipation of profiting when the exchange closes, according to CRT Capital LLC analyst Kevin Starke. Many such investors have sold borrowed shares in anticipation of paying them back after the conversion. Any delays increase the cost of financing the trades.

    SEC Approval

    Citigroup Chief Financial Officer Edward “Ned” Kelly said on a May 7 conference call with analysts that the SEC must sign off on the exchange documents before the offer can proceed. The bank separately needs to complete an agreement with the U.S. Treasury Department to convert as much as $25 billion of government-held preferreds into a 34 percent common stake.

    Once the exchange offer is formally extended, the bank will keep it open at least 20 business days before closing, according to the filing.

    “We plan to launch this as quickly as we can,” Kelly said on the May 7 call.

    In a note to investors yesterday, Sanford C. Bernstein & Co. analyst John McDonald wrote that “questions remain about both the timing and amount” of the pending offer.

    “While it is difficult to gain any clarity on this issue, we sense that Citi will likely complete its preferred-to-common exchange in early- to mid-third quarter,” he wrote.

    The bank’s shares fell 3.4 percent to $3.39 as of 4:15 p.m. in New York Stock Exchange composite trading.

    To contact the reporters on this story: Josh Fineman in New York at; Bradley Keoun in New York at
  2. oh good, it can trade like pink sheets. Buy 12.5 million shares for 2 grand and automatically be down 50% on the spread.
  3. Expect Citigroup to go to $5 per share tomorrow on this outstanding news.
  4. How does the conversion from preferred to common work? Does the preferred go out at the called price or where it is trading? About a month or so ago, one of those fast money peeps was long BAC preferreds and short the common as a way to play a conversion.
  5. :D :D
  6. LOL! It's like trading the exotic FX crosses at a bucketshop. It's rough to start 100pips in the hole.

    Could you imagine C being forced to sell 60MM at $.99/share?
  7. Sounds good. C should gap up 20% tomorrow and then another 20% on rumors S&P will kick them out of the index.

    I just spit diet coke all over my desk....
  9. this is insane, and look at C stock it's acting like nothing has happened!! amazing!
  10. pupu



    If the allmighty US govmnt can do it why not Littl'C?
    #10     Jun 3, 2009