Check out the WSJ article HERE
From the article:
Embattled Citigroup Inc. and the U.S. have reached an agreement in which the government will substantially increase its stake in the bank and in return will demand a boardroom shakeup, according to people familiar with the matter.
Under a deal expected to be announced early Friday morning, the Treasury Department has agreed to convert some of its current holdings of preferred Citigroup shares into common stock. The government will convert its stake only to the extent that Citigroup can persuade private investors to do so alongside the government, the people said. The Treasury will match the private investors’ conversions dollar-for-dollar up to $25 billion.
The size of the government’s new stake will hinge on the amount of preferred shares that private investors, including sovereign wealth funds, agree to convert into common stock. The Treasury’s stake is expected to rise to 30% to 40% of Citigroup’s shares, the people said.
OK that’s probly a good thing, but what will it cost the government, what will happen to Citigroup shareholders?
Key details of the Citigroup-U.S. pact remain unclear.
Chief among those uncertainties is the price at which the government has agreed to convert its preferred shares into common. People briefed on the discussions said that Citigroup was asking for Washington to convert at a price of as much as $5 a share. That is double Citigroup shares’ $2.46 closing price Thursday.
Also unclear is exactly what boardroom changes the government is seeking. Citigroup’s 15-person board is already comprised primarily of directors who are considered independent of the company. In fact, three of the four directors who are not independent have already announced plans to step down this spring.
Aight, paying double the closing price for something that’s probly insolvent, that’s crazy talk….can we not learn from BAC’s miserable/ill-fated buyout of MER?
Penny stocks are boring right now, this is the topic du jour so let’s what you guys think!
Tags: Breaking News
