Treasury to sell 1.5B shares of Citigroup
Monday, April 26, 2010; 4:20 PM
The Treasury Department said Monday that it will begin selling 1.5 billion shares of Citigroup as part of a plan to divest its 27 percent ownership position in the bank.
Morgan Stanley is acting as the government's adviser on the deal and arranging the sale. After it is completed, the government will be left with about 6.2 billion Citigroup shares. "Treasury expects to provide Morgan Stanley with authority to sell additional shares after this initial amount," according to a government statement.
Treasury officials have said that they plan to sell the stock in increments over several months.
The offering is on track to be second-largest stock sale in history. At current stock prices, the sale of the initial 1.5 billion shares could be worth more than $7 billion. All of the government's shares are worth about $36 billion at current prices. Citigroup closed at $4.61 a share Monday afternoon.
The government received the shares as part of its bailout of the firm during the height of the financial crisis. Overall, Citigroup received $45 billion in federal aid. That included a $20 billion loan and another $25 billion that was offered in exchange for common stock.
If the sale proceeds as planned, Citigroup will have cut nearly all of its ties to the $700 billion Troubled Assets Relief Program. It has already repaid the $20 billion government loan.
The sale authorized Monday does not include the government's preferred securities in Citi or common stock warrants, "but we think the sale reduces some of the stigma attached to the government investment," Matthew Albrecht, a financials analyst for Standard & Poor's Equity Research, said in a research note.
A Citigroup spokesman declined to comment.