Citigroup to sell Pacers linked to Valero Energy

By Jennifer Chiou

New York, March 29 - Citigroup Funding Inc. is planning to price an issue of two-year Pacers (Premium mandatory Callable Equity-linked securities) based on Valero Energy Corp. stock, according to a 424B2 document filed with the Securities and Exchange Commission.

The notes will be priced at par of $10.00.

The securities will be subject to a mandatory premium call in October 2006, April 2007, October 2007 or April 2008 if Valero Energy stock trades at greater than or equal to a price between 90% and 95% of the initial share price. The specific call dates and prices will be determined on the pricing date.

If the notes are not called before maturity, investors will receive a number of Valero Energy shares equal to the exchange ratio if the company's stock closes at less than or equal to 60% of the initial value. Otherwise, investors will receive par in cash.

Citigroup said it will apply to list the Pacers on the American Stock Exchange as "PCV."

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