Citibank 2009 Annual Report Download - page 18

8
preferred stock issued to the U.S. Treasury and FDIC as consideration for the
loss-sharing agreement were exchanged for trust preferred securities. Prior to
the exchange of the preferred stock held by the U.S. government pursuant to the
exchange offers, Citigroup paid the U.S. government approximately $2.2 billion
in preferred dividends on its investment in Citi, and has subsequently paid
approximately $800 million in interest on the trust preferred securities issued
pursuant to the exchange offers.
Repayment of TARP and Exit from loss-sharing agreement
On December 23, 2009, Citigroup repaid the $20 billion of TARP trust
preferred securities held by the U.S. Treasury and exited the loss-sharing
agreement. In connection with the exit of the loss-sharing agreement,
$1.8 billion of the trust preferred securities held by the U.S. Treasury
out of the approximately $7.1 billion of trust preferred securities issued
in consideration for such agreement to the U.S. Treasury and FDIC
was cancelled.
In connection with the repayment of TARP in December 2009, Citigroup
raised an aggregate of approximately $20.3 billion in common equity. On
December 22, 2009 Citigroup issued $17.0 billion of common stock, or
approximately 5.4 billion shares, and $3.5 billion of tangible equity units
(T-DECs) of which approximately $2.8 billion was recorded as common
equity and $0.7 billion was recorded as long-term debt. On December 29,
2009, Citigroup raised an additional approximate $0.6 billion of common
stock, or approximately 185 million shares, pursuant to exercise of the
underwriters’ overallotment option. In addition, in January 2010, Citigroup
issued $1.7 billion of common stock equivalents to its employees in lieu
of cash compensation they would have otherwise received. Subject to
shareholder approval at Citi’s annual shareholder meeting scheduled to be
held on April 20, 2010, the common stock equivalents will be converted into
common stock.
Following the repayment of TARP and exit from the loss-sharing
agreement, as of December 31, 2009, the U.S. Treasury continues to hold
approximately 7.7 billion shares, or approximately 27.0%, of Citi’s common
stock, not including the exercise of the warrants issued to the U.S. Treasury
that remain outstanding, as described below. The U.S. Treasury has indicated
that it intends to sell its holding in Citi common stock in 2010, subject
to a 90-day lock-up period expiring on March 16, 2010. In addition, the
U.S. Treasury and FDIC continue to hold an aggregate of approximately
$5.3 billion of the trust preferred securities originally issued by Citi as
consideration for the loss-sharing agreement.
As a result of Citi’s repayment of the $20 billion of TARP trust preferred
securities and the exit of the loss-sharing agreement, effective in 2010, Citi
is no longer deemed to be a beneficiary of “exceptional financial assistance”
under TARP.
Common stock warrants issued to the U.S. Treasury
The three warrants issued to the U.S. Treasury as part of TARP and the loss-
sharing agreement remain outstanding as of December 31, 2009 following
Citi’s repayment of TARP and exit from the loss-sharing agreement.
Each of the warrants has a term of 10 years from the date of issuance. The
warrant issued to the U.S. Treasury in October 2008 has an exercise price of
$17.85 per share and is exercisable for approximately 210.1 million shares
of common stock. The warrant issued to the U.S. Treasury in December 2008
has an exercise price of $10.61 per share and is exercisable for approximately
188.5 million shares of common stock. The warrant issued to the U.S.
Treasury as part of the loss-sharing agreement in January 2009 also has an
exercise price of $10.61 and is exercisable for approximately 66.5 million
shares of common stock.