Investment in Citigroup (C) is now riskier.
By Daniel at 14 December, 2009, 10:32 am
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At least 5 billion shares more of common from the new offering.
>>$17 billion of common stock, with an over-allotment option of $2.55 billion; approximately $2.8 billion of prepaid common stock purchase contracts and approximately $0.7 billion of subordinated notes.
Another $1.7 billion worth of shares issued to employees.
>>Citi also will pay bonuses in stock rather than cash, as it has decided to issue in January 2010 $1.7 billion of common stock equivalents to employees in lieu of cash they would have otherwise received.
Plus over a billion more shares of common put into circulation.
>>The U.S. Treasury will sell up to $5 billion of the common stock it holds in a concurrent secondary offering.
Plus now total exposure to $144 billion of risk assets that were ring-fenced.
>>Cancelling the loss-sharing agreement also will put $144 billion of risk-weighted assets back onto its books.
We’ll see just how crazy the stock buyers are.
All this is clearly designed to probe the limits of their sensibilities.
The government needs get out of Citi completely because any remaining investment is now clearly at risk.
It’s time to the buyers to take the responsibility and the fall.
- tarn
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