Bankruptcy

Citi to Convert 58 Billion into Stock

By mcbride

Preferred shares are being converted into equity and the government will then be an owner of 34% of the company.  ?Citi?s conversion is expected to flood the market with 18 billion new Citi common shares, diluting existing investors by 80 percent.?  Since so many governmental/corporate actions fall into this category, it is no longer even useful to say ?never before in the financial history of the US has this been done.?* ?Citigroup is counting on the transaction to replenish an equity base eroded by $36 billion of net losses during the past six quarters. Last week?s encounter with Bair underscores the scrutiny Pandit, 52, faces as the former Morgan Stanley banker steers Citigroup toward partial government ownership to shore up its finances. Treasury Secretary Timothy Geithner has indicated he thinks Pandit?s turnaround plan should be given time to work, according to people with knowledge of his views.?**

 Here is a link to the two quoted articles on this topic: *http://dealbook.blogs.nytimes.com/2009/06/10/citi-sets-plan-to-convert-58-billion-in-stock/?ref=business ; ** http://www.bloomberg.com/apps/news?pid=20601103&sid=arFtrkppnwPc&refer=news  

 Michael

Full post as published by Texas Lawyer Blog on June 11, 2009 (boomark / email).