GIC raises Citigroup stake
US$6.88b in preferred shares converted to common shares
By Alvin Foo
PHOTO: AP
THE Government of Singapore Investment Corporation (GIC) has increased its stake in US banking giant Citigroup from what was potentially 4 per cent to 11.1 per cent.
The increase, which makes GIC the second largest shareholder in the bank after the United States government, came after it decided last night to convert its US$6.88 billion (S$10.6 billion) investment in preferred shares of the bank to common shares.
Stake in Citigroup
JANUARY 2008
Investment: US$6.88 billion in preferred notes, with a 7 per cent dividend per year.
... more
The closely watched move followed a day of dramatic developments for the beleagured bank which began when the US government made the first move to convert up to US$25 billion of its own preferred shares to common shares, raising its stake to as much as 36 per cent.
The US government's move was conditional on Citigroup getting other major preferred shareholders to do the same. The bank also agreed to reconstitute its board. CEO Vikram Pandit will stay on.
This precipitated investors like GIC, Saudi Arabia's Prince Alwaleed Talal, Capital Research Global Investors and Capital World Investors into also converting their preferred shares.
The exchange of preferred shares for common shares is aimed at raising what is known as the bank's 'tangible common equity' - a key capital adequacy measurement. It also saves money by cutting dividend payments on the preferred shares, estimated at US$5.5 billion a year in total.
Preferred shares come with a fixed yearly dividend and are usually convertible to common stock at a certain price.
Common shares are the shares that most retail investors buy on stock markets. They pay fluctuating dividends declared yearly by companies.
For GIC, the conversion will mean exchanging its preferred shares for ordinary shares at a much lower price of US$3.25 per share than its original investment in January last year.
The preferred shares were then convertible at US$26.35 per share. This translated roughly to a 4 per cent stake at the time, if the shares were fully converted.
Read the full story in today's edition of The Straits Times.
Latest comments
the issue is how they got there and who to blame!!! the way its going they might as well write it off and say sorry. and the dude responsible for the citibank/ubs/merrilllynch 'investments' can resign.. or maybe already kena goreng sotong?
Posted by: lazylizard at Sat Feb 28 16:35:53 SGT 2009
What a badly written article. The share price is BEFORE the massive dilution. On Monday, Citi share price is going to collapse....so GIC will still have list more than US$3billion!!!
Posted by: ronintan at Sat Feb 28 14:56:52 SGT 2009
When I convert my rights to shares hor, I need to pay more cash.
Now GIC convert hor, need to pay cash or not har?
Posted by: LaoHero64 at Sat Feb 28 13:15:29 SGT 2009
When Temasek under Ho Ching bought the hard disk maker Micropolis that eventually went belly up, we were told that "like that one, investment is risky." And no one was held accountable.
Now Tony Tan said when GIC bought into Citigroup, he said it was the dream buy. Now it went sour, I think they will say the same thing "like that one, investment is risky." And no one will be held responsible again.
Singapore is too small and needs all its talents. Let's remember and praise all the successes and let their occasional failures just blow by.
Posted by: ForgiveForget at Sat Feb 28 13:13:40 SGT 2009
Like other big stakeholders, GIC has no other choice but to play along otherwise if citi is nationalised, there's nothing left. At least, now there's still "hope". Americans dug their own grave and pulled the rest of the world down.
Posted by: JoJo2008 at Sat Feb 28 12:39:35 SGT 2009
US$6.88b in preferred shares converted to common shares
By Alvin Foo
PHOTO: AP
THE Government of Singapore Investment Corporation (GIC) has increased its stake in US banking giant Citigroup from what was potentially 4 per cent to 11.1 per cent.
The increase, which makes GIC the second largest shareholder in the bank after the United States government, came after it decided last night to convert its US$6.88 billion (S$10.6 billion) investment in preferred shares of the bank to common shares.
Stake in Citigroup
JANUARY 2008
Investment: US$6.88 billion in preferred notes, with a 7 per cent dividend per year.
... more
The closely watched move followed a day of dramatic developments for the beleagured bank which began when the US government made the first move to convert up to US$25 billion of its own preferred shares to common shares, raising its stake to as much as 36 per cent.
The US government's move was conditional on Citigroup getting other major preferred shareholders to do the same. The bank also agreed to reconstitute its board. CEO Vikram Pandit will stay on.
This precipitated investors like GIC, Saudi Arabia's Prince Alwaleed Talal, Capital Research Global Investors and Capital World Investors into also converting their preferred shares.
The exchange of preferred shares for common shares is aimed at raising what is known as the bank's 'tangible common equity' - a key capital adequacy measurement. It also saves money by cutting dividend payments on the preferred shares, estimated at US$5.5 billion a year in total.
Preferred shares come with a fixed yearly dividend and are usually convertible to common stock at a certain price.
Common shares are the shares that most retail investors buy on stock markets. They pay fluctuating dividends declared yearly by companies.
For GIC, the conversion will mean exchanging its preferred shares for ordinary shares at a much lower price of US$3.25 per share than its original investment in January last year.
The preferred shares were then convertible at US$26.35 per share. This translated roughly to a 4 per cent stake at the time, if the shares were fully converted.
Read the full story in today's edition of The Straits Times.
Latest comments
the issue is how they got there and who to blame!!! the way its going they might as well write it off and say sorry. and the dude responsible for the citibank/ubs/merrilllynch 'investments' can resign.. or maybe already kena goreng sotong?
Posted by: lazylizard at Sat Feb 28 16:35:53 SGT 2009
What a badly written article. The share price is BEFORE the massive dilution. On Monday, Citi share price is going to collapse....so GIC will still have list more than US$3billion!!!
Posted by: ronintan at Sat Feb 28 14:56:52 SGT 2009
When I convert my rights to shares hor, I need to pay more cash.
Now GIC convert hor, need to pay cash or not har?
Posted by: LaoHero64 at Sat Feb 28 13:15:29 SGT 2009
When Temasek under Ho Ching bought the hard disk maker Micropolis that eventually went belly up, we were told that "like that one, investment is risky." And no one was held accountable.
Now Tony Tan said when GIC bought into Citigroup, he said it was the dream buy. Now it went sour, I think they will say the same thing "like that one, investment is risky." And no one will be held responsible again.
Singapore is too small and needs all its talents. Let's remember and praise all the successes and let their occasional failures just blow by.
Posted by: ForgiveForget at Sat Feb 28 13:13:40 SGT 2009
Like other big stakeholders, GIC has no other choice but to play along otherwise if citi is nationalised, there's nothing left. At least, now there's still "hope". Americans dug their own grave and pulled the rest of the world down.
Posted by: JoJo2008 at Sat Feb 28 12:39:35 SGT 2009
