By Rebecca Melvin
New York, Dec. 17 - Citigroup Inc. priced $3.5 billion of three-year mandatory convertibles, known as tangible equity units, at par of $100 to yield 7.5% with a 25% initial conversion premium.
The deal, priced after the close Wednesday, came at the rich end of talk for a yield of 7.5% to 8% and a conversion premium of 20% to 25%.
Citi also priced 5.4 billion common shares at $3.15 each.
The company noted that at a combined $20.5 billion of the combined offering of common stock and tangible equity units is the largest public equity offering in U.S. capital markets history.
Proceeds will be used to repay $20 billion of TARP trust preferred securities and to terminate a loss-sharing agreement with the U.S. government.
The Treasury did not sell any of its shares. It had said it would sell up to $5 billion.
The tangible equity units are comprised of a prepaid stock purchase contract and a junior subordinated amortizing note. The stock purchase contract will settle on Dec. 15 for between 25.3968 and 31.7460 shares of Citi common stock.
The amortizing notes have a scheduled final installment payment date of Dec. 15, 2012. Citigroup has the right to defer installment payments at any time but not beyond Dec. 15, 2015.
Citigroup Global Markets Inc. was the bookrunner, with Morgan Stanley as co-manager.
The stock offering has a greenshoe for 809.5 million shares.
New York-based Citigroup is a financial services company.
| Issuer: | Citigroup Inc.
|
| Issue: | Mandatory convertibles
|
| Amount: | $3.5 billion
|
| Concurrent offering: | $17 billion of stock at $3.15 per share
|
| Maturity: | Dec. 15, 2012
|
| Bookrunner: | Citigroup Global Markets Inc.
|
| Co-manager: | Morgan Stanley & Co.
|
| Coupon: | 7.5%
|
| Price: | Par of $100 per unit
|
| Conversion price: | $7.50
|
| Conversion premium: | 25%
|
| Minimum conversion rate: | 25.3968
|
| Maximum conversion rate: | 31.7460
|
| Calls: | Non-callable
|
| Price talk: | 7.5%-8%, up 20%-25%
|
| Pricing date: | Dec. 16
|
| Settlement date: | Dec. 22
|
| Distribution: | Registered
|
| Stock symbol: | NYSE: C
|
| Stock reference price: | $3.15
|
| Stock closing price: | $3.45 on Dec. 16
|
| Market capitalization: | $73.6 billion
|
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