Dilution - Dilution - Dilution! Government gets warrants in C!

Quote from wareco:

I'm still waiting for you to explain how the preferred is dilutive.
More...

The proper definition of dilutive is any change to capital structure that reduces the per-share earnings assignable to the common. Since the preferreds have an earmark on the first $2.2B of earnings every year, this is without question dilutive.

But this is all dancing around the bigger issue. Citi is insolvent - the important question here is whether $28B is enough to make them solvent. If it isn't - and I don't see any coherent argument making the case that it is - the dilution aspects aren't going to matter anyway.
 
Even more ridiculous than bailing out the U.S. automakers.

Citi is a MULTINATIONAL company. There are branch offices right here in Brno, Czech Republic that employ Czechs, not Americans.

Why should U.S. taxpayers bail out Citi? To save Czech jobs?

--------------------------------------------------------------------------------

Citigroup? You mean the company that owns Smith Barney, who recommended that I buy shares in an Alliance Fund that was weighted heavily with Mexican Pesos just before the Peso crashed in 1994? Citi is a Mafia-controlled company. Why should U.S. taxpayers support the Mafia?
 
Quote from Random.Capital:

The proper definition of dilutive is any change to capital structure that reduces the per-share earnings assignable to the common. Since the preferreds have an earmark on the first $2.2B of earnings every year, this is without question dilutive.

But this is all dancing around the bigger issue. Citi is insolvent - the important question here is whether $28B is enough to make them solvent. If it isn't - and I don't see any coherent argument making the case that it is - the dilution aspects aren't going to matter anyway.
More...

I gotta go with Wareco on this. By your definition issuing debt would be dilutive. The coupon on the preferred is no different from interest on debt, both reduce eps.

This is leverage not dilution, the common get a residual claim on a larger asset base than before without putting in more money. I'm ignoring the warrants, I'm not goint to do the math to figure out which impact is more important.

I don't think anyone knows if they are really insolvent - who can trust the marks on any financial's assets these days? The question is are they liquid in the near term and do people trust them enough to do business with them. This cash helps on that score.
 
I think you guys got the warrants dillution wrong. C agreed to issue 270m shares at $10. They got 5.4b shares outstading.
Once the stock reaches $10 the market cap would be higher of course
 
Quote from bond tr4der:

C has a market cap of $20 billion. 10% of 20 billion is 2 billion so you're right. It's closer to 13% warrants for the company based on Friday's close.

I strongly disagree that $20 billion in preferred stock is not dilutive.
More...

up 50%. Does that help?
 
Quote from lukematt:

Why should U.S. taxpayers bail out Citi? To save Czech jobs?
More...

Well obviously this is a sweet deal for Citi but at the same time I'm really not sure we wanted to test what would happen if the stock went to 50 cents today and 2 trillion in "stuff" would have to be put up at firesale prices..
At least the government was forced to do something like the original TARP. I mean there is a pretty obvious feedback loop with these toxic assets with something like Citi going down the drain, so credit tightens more, more people lose jobs, more people default which makes the toxic assets all the more toxic, repeat with another big bank.
Hopefully that feedback loop works the on the positive side too with making the toxic assets less toxic.
 
Quote from jdeezero05:

Well obviously this is a sweet deal for Citi but at the same time I'm really not sure we wanted to test what would happen if the stock went to 50 cents today and 2 trillion in "stuff" would have to be put up at firesale prices..
More...
In other words, you're succumbing to the fearmongering that has driven the U.S. since 9/11.
 
I previously **had** accounts at Citibank in Brno, Czech Republic, but I closed them after I became pissed off at Citibank’s repeated incompetence.

When I needed to perform a transaction beyond a simply deposit or withdrawal, Citi never got it right the first time. Wiring money to the U.S. Automatic payment of my telephone bill. Nothing.

-----

I needed to get a VISA card so I could make some payments through the Internet. When I arrived at Citibank’s office, the branch manager led me to my “Personal Banker”, a new face that I hadn’t previously met. She did not even greet me or find out who I was. Instead, she immediately said to the branch manager, “I’m busy now. I’m doing investments.”

My personality only knows two modes: nice guy or devil from Hell. Obviously, my “Personal Banker” and I were going to have a problem, so I excused myself and went for my wife. When we returned, our “Personal Banker” informed us that Citibank has only corporate VISA cards, not personal ones. Therefore, my wife and I left to open an account at another bank.

A short time later, we found out that Citibank **does** have personal VISA cards.

This young lady is “doing investments” but she doesn’t even know which VISA cards Citibank offers.

-----

My wife works as a bridge designer. Her supervisor has a son who works for Citi in Prague. According to the son, Citi’s managers have explicitly told their subordinates, “If you want to get ahead at Citi, you must give us negative information about your co-workers”.

-----

That’s what your hard-earned tax dollars are going to bail out.
 
You must log in or register to reply here.
Back
Top