This is big news, and if I understand this correctly, it looks like in the short term the market will be flooded with common shares...double what we have now...correct me if I'm mistaken, please. Good news is that they figured out what to do with the government's stake in Citi:
Citi Announces Final Results of Public Share Exchange and Completes Further Matching Exchange with U.S. Government
14 minutes ago - Businesswire
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C 3.07 -4.66%
As of 11:59 AM ET 7/30/09
Citi today announced the final results of its offers to exchange its publicly held convertible and non-convertible preferred and trust preferred securities for newly issued shares of its common stock and the completion of the previously announced further matching exchange offer with the U.S. Government. Approximately $20.3 billion in aggregate liquidation value of publicly held convertible and non-convertible preferred and trust preferred securities were validly tendered and not withdrawn in the public exchange. This represents 99% of the total liquidation value of securities that Citi was offering to exchange. Citi has accepted for exchange all publicly held convertible and non-convertible preferred and trust preferred securities that were validly tendered and not withdrawn and has issued 5,834,126,284 common shares in the public exchange offer.
In the matching exchange, the U.S. Government exchanged an additional $12.5 billion in aggregate liquidation preference of preferred stock for interim securities, while the remaining $27.059 billion aggregate liquidation preference of preferred stock held by the U.S. Government was exchanged for an equal liquidation amount of new trust preferred securities bearing an annual coupon of 8 percent.
With the expiration of the public exchange offers, the completion on July 23, 2009 of exchange offers with the U.S. Government and certain private holders and the completion of today's further exchange with the U.S. Government, Citi has completed exchanges of approximately $58 billion in aggregate liquidation value of preferred and trust preferred securities into common stock and interim securities that will convert into common stock and interim securities. The interim securities will convert into common stock upon authorization of the increase in Citi's authorized common stock.
As a result of these exchanges, Citi Tier 1 Common will increase by approximately $64 billion and its Tangible Common Equity (TCE) will increase by approximately $60 billion.
(TCE and Tier 1 Common are non-GAAP financial measures. A reconciliation of TCE and Tier 1 Common to total stockholders' equity and common stockholders' equity, respectively, is included below.)
The liquidation preference of securities in each series of publicly held convertible and non-convertible preferred and trust preferred securities accepted by Citi in the public exchange offers are listed in the tables below.
CUSIP Title of Series of Public Preferred Stock Liquidation Preference Tendered Percentage of Outstanding Liquidation Preference Tendered
172967556 8.500% Non-Cumulative Preferred Stock, Series F $1,968,415,775 96.49%
172967ER8 8.400% Fixed Rate/Floating Rate Non-Cumulative Preferred Stock, $5,878,745,846 97.98%
Series E
172967572 8.125% Non-Cumulative Preferred Stock, Series AA $3,618,241,750 97.40%
172967598 6.500% Non-Cumulative Convertible Preferred Stock, Series T $3,145,950,950 99.28%
Acceptance Priority Level CUSIP/ISIN Title of Trust Preferred Securities Issuer Liquidation Amount Tendered Percentage of Liquidation Amount Tendered
1 173094AA1 8.300% E-TRUPS(R) Citigroup Capital XXI $1,154,199,000 32.98%
2 173085200 7.875% E-TRUPS(R) Citigroup Capital XX $344,754,650 43.78%
3 17311U200 7.250% E-TRUPS(R) Citigroup Capital XIX $655,700,800 53.53%
4 17309E200 6.875% E-TRUPS(R) Citigroup Capital XIV $259,317,975 45.90%
5 17310G202 6.500% E-TRUPS(R) Citigroup Capital XV $554,731,675 46.81%
6 17310L201 6.450% E-TRUPS(R) Citigroup Capital XVI $646,276,325 40.39%
7 17311H209 6.350% E-TRUPS(R) Citigroup Capital XVII $398,801,825 36.25%
8 XS0306711473 6.829% E-TRUPS(R) Citigroup Capital XVIII GBP 400,099,000 80.02%
9 17305HAA6 7.625% TRUPS(R) Citigroup Capital III $5,947,000 2.97%
10 17306N203 7.125% TRUPS(R) Citigroup Capital VII $252,852,550 21.99%
11 17306R204 6.950% TRUPS(R) Citigroup Capital VIII $308,710,075 22.05%
12 173064205 6.100% TRUPS(R) Citigroup Capital X $131,054,425 26.21%
13 173066200 6.000% TRUPS(R) Citigroup Capital IX $253,129,675 23.01%
14 17307Q205 6.000% TRUPS(R) Citigroup Capital XI $140,321,800 23.39%
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 140 countries. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Additional information may be found at www.citigroup.com or www.citi.com.
In connection with the exchange offers, which expired on July 24, 2009, Citi filed a Registration Statement on Form S-4 that contains a prospectus and related exchange offer materials with the Securities and Exchange Commission (the "SEC") on July 17, 2009. This registration statement was declared effective on July 17, 2009. Citi has mailed the prospectus to the holders of its series of convertible and non-convertible public preferred stock and TRUPS and E-TRUPs that may be eligible to participate in the exchange offers. Holders of these series of preferred stock, TRUPs and E-TRUPs are urged to read the prospectus and related exchange offer materials because they contain important information.
In connection with the solicitation of proxies for the proposed amendments to its certificate of incorporation, Citi has filed definitive proxy statements with the SEC. The definitive proxy statements and accompanying proxy cards have been mailed to stockholders of Citi. Investors and security holders of Citi are urged to read the proxy statements and other relevant materials because they contain important information.
Citi and its directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed amendments to its certificate of incorporation and the certificates of designations of its public preferred stock. Information regarding Citi's directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2008, which was filed with the SEC on February 27, 2009, and its definitive proxy statement for its 2009 annual meeting of shareholders, which was filed with the SEC on March 19, 2009. The proxy statements contain additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise.
As stated above, TCE is a non-GAAP financial measure. Citigroup's management believes TCE is useful because it is a measure utilized by regulators and market analysts in evaluating a company's financial condition and capital strength. TCE, as defined by Citigroup, represents Common equity less Goodwill and intangible assets (excluding MSRs) net of the related deferred tax liabilities. Other companies may calculate TCE in a manner different from Citigroup. A reconciliation of Citigroup's total stockholders' equity to TCE follows:
June 30, 2009
(in millions of dollars) (Preliminary)
Citigroup's Total Stockholders' Equity $ 152,302
Less:
Preferred Stock 74,301
Common Equity 78,001
Less:
Goodwill - as reported 25,578
Intangible Assets (other than MSR's) - as reported 10,098
Goodwill and Intangible Assets - recorded as Assets of 3,618
Discontinued Operations Held for Sale
Less: Related Net Deferred Tax Liabilities 1,296
Tangible Common Equity (TCE) $ 40,003
Approximate increase to TCE from the Exchange Offer $ 60,000
Approximate TCE (reflecting the impact of the Exchange Offer) $ 100,003
Preliminary. Citigroup will file its June 30, 2009 Form 10-Q in
early August 2009.
Tier 1 Common is a non-GAAP financial measure. Citigroup's
management believes Tier 1 Common is a useful measure because it
is a measure used by banking regulators in evaluating a company's
financial condition and capital strength and thus investors desire
to see this information. Tier 1 Common was developed by the
banking regulators and is defined as Tier 1 Capital less
non-common elements including qualified perpetual preferred stock,
qualifying noncontrolling interests in subsidiaries and qualifying
trust preferred securities. A reconciliation of Tier 1 Common to
Citigroup's common stockholder's equity is included below.
June 30, 2009
In millions of dollars, except ratios (Preliminary)
Tier 1 Common
Citigroup common stockholders' equity $ 78,001
Less: Net unrealized gains (losses) on securities (7,055)
available-for-sale, net of tax (1)
Less: Accumulated net losses on cash flow hedges, net of tax (3,665)
Less: Pension liability adjustment, net of tax (2) (2,611)
Less: Cumulative effect included in fair value of financial 2,496
liabilities attributable to credit worthiness, net of tax (3)
Less: Disallowed deferred tax assets (4) 24,672
Less: Intangible assets:
Goodwill 26,111
Other disallowed intangible assets 10,023
Other (893)
Total Tier 1 Common $ 27,137
Qualifying perpetual preferred stock $ 74,301
Qualifying mandatorily redeemable securities of subsidiary trusts 24,034
Qualifying noncontrolling interest 1,082
Total Tier 1 Capital $ 126,554
Preliminary. Citigroup will file its June 30, 2009 Form 10-Q in
early August 2009.
(1) Tier 1 Capital excludes net unrealized gains (losses) on
available-for-sale debt securities and net unrealized gains on
available-for-sale equity securities with readily determinable
fair values, in accordance with regulatory risk-based capital
guidelines. In arriving at Tier 1 Capital, institutions are
required to deduct net unrealized losses on available-for-sale
equity securities with readily determinable fair values, net of
tax.
(2) The Federal Reserve Board granted interim capital relief for the
impact of adopting SFAS 158.
(3) The impact of including Citigroup's own credit rating in valuing
liabilities for which the fair value option has been elected is
excluded from Tier 1 Capital, in accordance with regulatory
risk-based capital guidelines.
(4) Of Citi's approximately $42 billion of net deferred tax assets at
June 30, approximately $13 billion of such assets were includable
without limitation in regulatory capital pursuant to the
risk-based capital guidelines, while approximately $25 billion of
such assets exceeded the limitation imposed by these guidelines
and, as "disallowed deferred tax assets," were deducted in
arriving at Tier 1 Capital. Citi's other approximately $4 billion
of net deferred tax assets at June 30, 2009 primarily represented
the deferred tax effects of unrealized gains and losses on
available-for-sale debt securities, which are permitted to be
excluded prior to deriving the amount of net deferred tax assets
subject to limitation under the guidelines.
SOURCE: Citi
Citi
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Stephen Cohen, 212-793-0181
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