Washington backing away from Citigroup sale

Discussion in 'Wall St. News' started by ASusilovic, Dec 16, 2009.

  1. Two days after Citigroup moved to untangled itself from Washington, the Treasury reversed course Wednesday and backed away from plans to immediately sell a portion of its stake in the banking giant, according to a person briefed on the situation.

    The decision came after Citigroup badly misread the financial markets on Wednesday and struggled to sell new shares to pay back its bailout funds, The New York Times’s Eric Dash reports.

    The new stock is expected to be priced at $3.15 a share — below the $3.25 price at which the government assumed its one-third stake in Citigroup. The Treasury is now expected to retain its stake and try to sell the stock over the next 6 to 12 months.

    The trouble with the share sale underscored the lingering worries over Citigroup’s financial health and raised concern that the bank’s eagerness to free itself from government oversight on issues such as employee pay might come at a high cost to shareholders. It also may heighten pressure on Citigroup’s chief executive, Vikram S. Pandit.

    Citigroup attempted to sell stock only a day after another giant bank, Wells Fargo, held a similar sale to raise money to pay back its bailout money.

    The development followed news earlier Wednesday that the Abu Dhabi Investment Authority had filed a multibillion-dollar arbitration claim claiming “fraudulent misrepresentation” on the part of Citigroup after the government-run fund’s $7.5 billion investment in Citigroup went south.

    A Citigroup spokesman, said the claims are “entirely without merit” and the bank planned to vigorously defend itself against them. John Fitzgibbons, the editor of IPOScoop.com, likened the Citigroup stock offering to a one-day sale at Macy’s department store.

    “They have to discount their merchandise to get the shoppers in,” Mr. Fitzgibbons said. “If they didn’t have a sale, nobody stream in.”

  2. jnorty


    the mkt is choking with massive supply. this year i believe a world record $200 bil of stock sales have been competed. think about it in last 1 week bac,wfc and c have issued $55 bil of stk.thats equal to 50-60 ipo's from 1999
  3. Tide31


    Something does not make a lot of sense. Citi traded down to $3.20 this evening. I bot a bunch. Worried something is seriously awry though. The $3.15 print was 17 times oversubscribed. So a nickel away from where $17Bil went up today there was demand for $300Bil of shares, yet they won't pay up a nickel? That used to be the commission on a trade. If there was such demand at $3.15 why could they not get a higher price? This is like the worst sydicate job I have ever seen. I would imagine Citi ran its own book. If GS ran it for them they would have jammed it on at $3.75 the first night and the gov't would have made a sale too and the stock would be $4+ now. Bove said that he was keeping his sell on it until someone at Citi explains to him how they blew this so bad.

    -Gov't refused to go along and make a sale on the print because it was below their investment price of $3.25

    -Abu Dhabi suing Citi saying they were misled 2 years ago. This is a joke, they said they really just want better access to management.

    -Citi negotiated to keep its $38Bil tax benefit on the positive side during negotiations
  4. ipatent


    Who in their right mind would buy C shares now?
  5. Tide31



    I guess the people who submitted bids for $300 Billion today. That bid would have been enough to buy the largest company in the world outright: XOM - Exxon
  6. Citigroup = insane company.
  7. I calculate a 49 cent 12 month price target.