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Consensus on C Tomorrow
- Thread starter luxor
- Start date
Are you guys not reading the original text?
Double-dilution whammy.
The "backstop" wording is...curious. Will protect against "unusually large" losses.
Here's the term sheet...
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20081123a1.pdf
"As a fee for this [backstop] arrangement, Citigroup will issue preferred shares to the Treasury and FDIC."
"In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury."
Double-dilution whammy.
The "backstop" wording is...curious. Will protect against "unusually large" losses.
Here's the term sheet...
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20081123a1.pdf
Hmmm...
So government gets $20 billion in preferreds for injection @ 8% and more preferreds for the right to access government funds.
So a good guess would be the government owns 79.9% of Citi? Similar to Fannie, Freddie, AIG, and whatever else we nationalized recently.
So government gets $20 billion in preferreds for injection @ 8% and more preferreds for the right to access government funds.
So a good guess would be the government owns 79.9% of Citi? Similar to Fannie, Freddie, AIG, and whatever else we nationalized recently.
Quote from Random.Capital:
Are you guys not reading the original text?
Double-dilution whammy.
The "backstop" wording is...curious. Will protect against "unusually large" losses.
Here's the term sheet...
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20081123a1.pdf
their earnings will be lower because of the preferred dividend. but its not a bad deal, they didnt even had warrants. its not really dilluting the common stock, its just $1.6B a year insurance program. The stock price was almost surely expecting something worse. I think C opens a good deal higher
$2.2B insurance policy - there are two sets of preferred totaling $28B - same 8% divie on each.
Dividend on common is gone.
What a stock does short-term on events like this is anybody's guess - but I can see precious little fundamental reason to hold the common at all. Bonds, other preferred etc, quite possibly, but I would have no interest in the common.
Dividend on common is gone.
What a stock does short-term on events like this is anybody's guess - but I can see precious little fundamental reason to hold the common at all. Bonds, other preferred etc, quite possibly, but I would have no interest in the common.