Current Report — Form 8-K Filing Table of Contents
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Citi
to Sell $7.5 Billion of Equity Units to the Abu Dhabi Investment Authority
NEW
YORK
- Citi announced today that it has reached an agreement to sell Equity Units,
with mandatory conversion into common shares, in a private placement to the
Abu
Dhabi Investment Authority (ADIA), a long-term investor committed to the U.S.
capital markets, in the amount of $7.5 billion. ADIA’s aggregate ownership in
Citi’s common shares, including the conversion of these Equity Units, will total
no more than 4.9% of Citi’s total shares outstanding.
"This
investment, from one of the world’s leading and most sophisticated equity
investors, provides further capital to allow Citi to pursue attractive
opportunities to grow its business,” said Win Bischoff, Citi’s Acting Chief
Executive Officer. “It builds on a series of actions we have taken over the past
several months to strengthen our capital base, which have included sales of
certain non-strategic assets, the issuance of trust
preferred securities,
and the
previously announced plan to use common stock to purchase 32% of Nikko Cordial
in Japan. In addition, ADIA is a significant participant in alternative
investments and emerging markets financial services, two areas in which we
have
major positions and have been expanding.
“This
investment also enables us to access capital in an efficient manner, and is
consistent with our strategy of maintaining a balance sheet that benefits from
highly diverse sources of funding in terms of both geography and type of
security,” Mr. Bischoff continued.
“Citi
possesses a unique position in the financial markets throughout the world.
We
see in Citi a highly respected company with a premier brand and with tremendous
opportunities for growth,” said ADIA's Managing Director, Sheikh Ahmed Bin Zayed
Al Nahayan. “This investment reflects our confidence in Citi’s potential to
build shareholder value.”
ADIA
has
agreed not to own more than a 4.9% stake in Citi, and will have no special
rights of ownership or control and no role in the management or governance
of
Citi, including no right to designate a member of the Citi Board of Directors.
Substantially
all of the investment proceeds will be treated as Tier 1 capital for regulatory
capital purposes. Accordingly, it will support Citi’s progress toward its goal
of achieving its targeted capital ratios by the end of the first half of 2008.
The investment is expected to close within the next several days.
Each
Equity Unit is mandatorily convertible into Citi shares at prices ranging from
$31.83 to $37.24 per share. The Equity Units convert to Citi common shares
on
dates ranging from March 15, 2010, to September 15, 2011, subject to adjustment.
Each
Equity Unit will pay a fixed annual payment rate of 11%, payable quarterly.
The
payment rate reflects market terms based on the conversion premium as well
as
Citi’s current dividend yield. Additional
details of the Equity Units are provided in an attachment to this release.
The
Abu
Dhabi Investment Authority (ADIA) is a well-established, well-respected
institutional investor committed to the stability of the global financial
infrastructure. It is the sovereign wealth fund of the government of Abu Dhabi,
one of the seven emirates that comprise the federation of the UAE.
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Citi,
the
leading global financial services company, has some 200 million customer
accounts and does business in more than 100 countries, providing consumers,
corporations, governments and institutions with a broad range of financial
products and services, including consumer banking and credit, corporate and
investment banking, securities brokerage, and wealth management. Citi’s major
brand names include Citibank, CitiFinancial, Primerica, Smith Barney and
Banamex. Additional information may be found at www.citigroup.com
or
www.citi.com.
Certain
statements in this document are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act. These statements are based
on
management's current expectations and are subject to uncertainty and changes
in
circumstances. Actual results may differ materially from those included in
these
statements due to a variety of factors. More information about these factors
is
contained in Citigroup's filings with the Securities and Exchange
Commission.
Media
Contacts:
Christina
Pretto
(212)
559-9560
Shannon
Bell
(212)
793-6206
Michael
Hanretta
(212)
559-9466
Investors:
Arthur
Tildesley
(212)
559-2718
Fixed
Income Investors:
Maurice
Raichelson
(212)
559-5091
2
Selected
Terms of the Upper DECS Equity Units
THE
SELECTED TERMS SHOULD BE READ IN CONJUNCTION WITH THE DESCRIPTION OF SECURITIES
TO BE FILED ON FORM 8-K WITH THE SECURITIES AND EXCHANGE
COMMISSION
Investment
Amount:
$7,500,000,000
Security:
Upper
DECS Equity Units, which are mandatorily convertible securities consisting
of a contract to purchase stock at different purchase dates, and
an
undivided beneficial interest in trust preferred
securities.
Issuer:
Citi
or the “Company”
Investor:
Abu
Dhabi Investment Authority (“ADIA”) or the “Investor”
Payment
Rate:
11.00%
in aggregate per annum, payable quarterly
The
payment rate consists of a payment on each series of the trust preferred
securities and a contract payment on the purchase contracts.
Trust
preferred payments and purchase contract payments are both deferrable
under certain circumstances.
Each
settlement date is subject to an extension of up to one
year.
Remarketing
of the Trust Preferred Securities on Behalf of Investors; Subsequent
Redemption
Prior
to the settlement of the purchase contracts, there will be remarketings
of
the trust preferred securities to new investors on market terms.
Upon
remarketing, the trust preferred securities will be redeemable between
2041 and 2042, subject to earlier redemption.
If
Citi issues in excess of $5 billion of equity or equity-linked securities
at a sale price below $31.83 per share, or additional Upper DECS
Equity
Units with a payment rate higher than 11% or a conversion premium
below
the conversion premium of this security, during the one year period
following the issuance of the securities, the maximum conversion
price may
be reduced, but not to less than $31.83.
Transfer
Restrictions
The
investor may not transfer, sell or hedge the Upper DECS Equity Units
or
its exposure to the underlying shares for at least 2-years following
the
settlement date. After 2-years following the settlement date, until
3-years after the final stock conversion date, the investor is subject
to
certain manner of sale restrictions.
Standstill
Agreement
Customary
standstill provisions, including a prohibition on direct or indirect
acquisitions of beneficial ownership of more than 4.9% of the voting
shares (on an as-converted basis).
Investor
Lock-up on Company Securities
The
investor is not permitted to transact in any securities of Citi for
one
year from the issue date of the Upper DECS Equity Units, subject
to
certain exceptions.
