The U.S. government will sell off its remaining 7.0 percent stake in Citigroup
The proposed offering would mark the disposal of a government stake in Citigroup that once stood as high as 36 percent after $45 billion in taxpayer bailouts in 2008 and 2009.
Citi has paid back $20 billion in preferred stock, while another $25 billion was converted to 7.7 billion common shares held by the Treasury. A subsequent Citi share offering reduced the government's stake to 27 percent, which the Treasury has whittled down over the past year via the sale of 5.3 billion shares in controlled trades in the market.
The Treasury, which will sell the final stake with Morgan Stanley acting as bookrunning manager, on Monday filed a prospectus for the sale with the Securities and Exchange Commission. It can be seen at: http://www.sec.gov/Archives/edgar/data/831001/000095012310111154/y88200e424b7.htm#107
Citi is pleased that the U.S. Department of the Treasury has finalized plans to exit from its remaining holdings of Citigroup common stock. We are very appreciative of the support provided by the Treasury during the financial crisis, Citigroup spokesman Jon Diat said in a statement.
The move to sell the remaining shares in a public offering follows last month's stronger-than-expected initial public offering in General Motors Corp.
IN THE BLACK
The Treasury can already declare a profit on the Citigroup bailout, a person close to the offering said.
Through October, it took in $42.8 billion in total proceeds from Citigroup, including repayments, share sale proceeds and dividend payments against the $45 billion bailout.
The Treasury sold another 900 million shares in November and so far in December at prices above $4, providing at least another $3.6 billion, pushing the total take above $46 billion, said the person, who cited figures that have not yet been made public.
If the remaining 2.4 billion shares were sold at Monday's closing price of $4.45 a share, the offering would add another $10.68 billion to the Citi proceeds. The Treasury acquired the shares at a $3.25 conversion rate.
The Treasury also said it would continue to hold warrants to purchase Citigroup shares issued as part of the bailouts. These may be repurchased by Citigroup or sold in a separate auction for an additional profit.
The Treasury also said it is entitled to receive some $800 million in Citigroup Trust Preferred Securities from the Federal Deposit Insurance Corp under a debt guarantee program -- provided that the FDIC incurs no losses on Citigroup debt it backstopped during the financial crisis.
(Additional reporting by Paritosh Bansal and Maria Aspan in New York; Editing by Leslie Adler)