Citi may sell non-convertible preferreds

By Sheri Kasprzak

New York, Jan. 17 - Citigroup might be closer to selling an offering cumulative non-convertible preferred stock, according to a preliminary prospectus statement filed Thursday with the Securities and Exchange Commission.

A source reached Thursday at Citi said he could confirm what was in the preliminary prospectus but could not provide additional details.

"We're still working on the deal so I'm not at liberty to divulge any additional information," he said.

According to the prospectus, the preferreds will be sold as depositary shares comprised of series AA non-cumulative preferred stock. The preferreds have a liquidation preference of $25,000 each.

Citi is the bookrunner for the deal with Merrill Lynch & Co.; Morgan Stanley; UBS Investment Bank; Wachovia Securities; Banc of America Securities LLC; Barclays Capital; Bear, Stearns & Co. Inc.; Deutsche Bank Securities; Goldman, Sachs & Co.; Lehman Brothers; RBC Capital Markets; and Wells Fargo Securities as the co-managers.

Proceeds from the offering will be used for general corporate purposes, including the financing of operating units and subsidiaries, the financing of acquisitions or business expansions and the refinancing of existing debt obligations, according to the SEC filing. The bank may also use the proceeds to hedge its exposure to payments it may have to make on index warrants and indexed notes

Citi acknowledged earlier this week that it was considering selling non-convertible preferreds as part of a plan to strengthen its capital base. The offering also includes $12.5 billion in convertible preferreds in a private offering and $2 billion in a public offering.

Citi said Tuesday it plans to lower its quarterly dividend to 32 cents per share, payable on Feb. 22, 2008. The bank also intends to continue selling its non-core assets.

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