By Devika Patel
Knoxville, Tenn., Jan. 17 - Citigroup priced an upsized $2.9 billion of perpetual non-cumulative convertible preferred stock with a 6.5% dividend and a 35% initial conversion premium.
The deal, described as "significantly oversubscribed" by Citigroup, was increased from a planned $2 billion and priced with the dividend at the low end of talk of 6.5% to 6.75% and with a conversion premium above the planned 24%.
The conversion price of $33.73 is a roughly 35% premium over Citi's closing stock price of $24.96 on Thursday.
It is a 28% premium over the $26.35 stock level used to set the conversion price on the simultaneous $12.5 billion private placement of 7% non-cumulative convertible preferred stock. That transaction was announced with a 20% conversion premium and the conversion price was set at $31.62 after the close on Thursday.
The public convertible offering came as $50 liquidation preference shares, each representing 1/1000th of a $50,000 liquidation preference preferred share.
The series T convertible preferred stock will pay dividends in cash at a rate of 6.5% per annum, payable quarterly.
Each preferred share will be convertible at any time into 1,482.3503 shares of common stock of the company.
The stock is perpetual and has no maturity date. On or after Feb. 15, 2013, Citi can force conversion subject to a 130% hurdle. From Feb. 15, 2015, the company may redeem the stock on any dividend payment date.
The transaction is part of Citigroup's capital raising plan announced Tuesday following the bank's nearly $10 billion fourth-quarter loss. Much of that loss was driven by an $18.1 billion write-down primarily in its mortgage portfolio.
Citi Markets & Banking is the bookrunner of the Securities and Exchange Commission-registered transaction.
Citigroup is a New York-based commercial and investment bank. The company plans to use the proceeds for general corporate purposes.
| Issuer: | Citigroup
|
| Issue: | Perpetual non-cumulative convertible preferred stock
|
| Bookrunners: | Citi Markets & Banking
|
| Amount: | $2.9 billion, upsized from $2 billion
|
| Maturity: | Perpetual
|
| Dividend: | 6.5%
|
| Price: | Par
|
| Yield: | 6.5%
|
| Conversion premium: | 35% over Thursday's closing stock price
|
| Conversion price: | $33.73
|
| Call protection: | Non-callable before Feb. 15, 2015, then forced conversion option for two years subject to 130% hurdle; callable on dividend payment dates from Feb. 15, 2015
|
| Price talk: | 6.5%-6.75%, up 24%
|
| Pricing date: | Jan. 17, after the close
|
| Settlement date: | Jan. 23
|
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