Citigroup prices $2.9 billion convertibles

Citigroup Inc said on Thursday it priced $2.9 billion of convertible preferred stock, in a deal that brings the amount of capital Citi raised in its most recent round to at least $15.4 billion.

Citigroup said on Tuesday that it had privately sold $12.5 billion of convertible preferred securities to investors, including the governments of Singapore and Kuwait. The largest bank in the United States still has a preferred stock offering to sell, which should further boost the total amount of capital raised beyond $15.4 billion.

The capital is meant to offset recorded and expected write-downs in assets linked to subprime mortgages, as well as credit losses from areas including consumer auto and credit card loans.

The convertible preferred offering was originally planned to be about $2 billion, but the size was increased, in what is typically a sign of strong demand.

The $50,000 principal amount of one of the convertible preferreds can buy about 1,482 Citi shares at $33.73 per share at any time.

 

Citi's shares closed at $24.94 on Thursday, down nearly 5 per cent amid a broader rout in the financial sector.

The offering is expected to close on January 23 and will pay quarterly dividends in cash at a rate of 6.5 per cent annualized. The first dividend payment date will be February 15, 2008, the company said.

The principle of the $12.5 billion of convertible preferreds sold privately can be used to buy shares at $31.62 a share, Citi said. (Reuters)