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The Rape of Singapore
Posted by: admin in Bail Out, tags: Citigroup, Singapore
Uncle Sam - "Pay up!"
Uncle Sam - "Pay up or else!"
As we correctly predicted, the U.S. is beginning to call in its markers.
If you read the fine print on the U.S. conversion of its Citigroup debt to ordinary shares in the company, you could have predicted it too.
Here’s the fine print:
The U.S. said it will convert its stake in Citigroup to the extent that Citigroup can persuade private investors, including several big foreign government investment funds, to do so.
The U.S. Treasury Department will match the private investors’ conversions dollar-for-dollar.
The arms have been twisted successfully, and the U.S. will convert 25 billion dollars of capital into Citigroup ordinary shares.
So whose arm got twisted?
We don’t know all of the victims, but Singapore’s GIC was, most likely, the largest.
Singapore will convert its preferred notes, which yielded 7%, to ordinary shares. Singapore will do this at a price of $3.25 a share below the conversion price of $26.35 as agreed when it invested in the preference notes.
This means Singapore is paying $23.10 a share for Citigroup, and giving up their 7% yield of $482 million a year for no yield at all!
Friday, on the NYSE, Citigroup dropped to $1.50 a share.
Let’s do the math. Singapore is paying $23.10 a share for shares worth $1.50. Singapore is paying over 15 times (15.4 to be exact) the going price for Citigroup shares.
That dilutes Singapore’s initial investment in Citigroup for the original $6.88 billion to $446 million - a loss for Singapore of $6.43 billion - or of 94% its original investment.
The rule to which Singapore’s GIC agreed (and why???)
* Owners of Citigroup’s privately-placed preferred shares, which include the U.S. government, will have their holdings converted based on the price of their original investment even though the bank’s share price has collapsed since they were made.
The Rape of Singapore
Posted by: admin in Bail Out, tags: Citigroup, Singapore
Uncle Sam - "Pay up!"
Uncle Sam - "Pay up or else!"
As we correctly predicted, the U.S. is beginning to call in its markers.
If you read the fine print on the U.S. conversion of its Citigroup debt to ordinary shares in the company, you could have predicted it too.
Here’s the fine print:
The U.S. said it will convert its stake in Citigroup to the extent that Citigroup can persuade private investors, including several big foreign government investment funds, to do so.
The U.S. Treasury Department will match the private investors’ conversions dollar-for-dollar.
The arms have been twisted successfully, and the U.S. will convert 25 billion dollars of capital into Citigroup ordinary shares.
So whose arm got twisted?
We don’t know all of the victims, but Singapore’s GIC was, most likely, the largest.
Singapore will convert its preferred notes, which yielded 7%, to ordinary shares. Singapore will do this at a price of $3.25 a share below the conversion price of $26.35 as agreed when it invested in the preference notes.
This means Singapore is paying $23.10 a share for Citigroup, and giving up their 7% yield of $482 million a year for no yield at all!
Friday, on the NYSE, Citigroup dropped to $1.50 a share.
Let’s do the math. Singapore is paying $23.10 a share for shares worth $1.50. Singapore is paying over 15 times (15.4 to be exact) the going price for Citigroup shares.
That dilutes Singapore’s initial investment in Citigroup for the original $6.88 billion to $446 million - a loss for Singapore of $6.43 billion - or of 94% its original investment.
The rule to which Singapore’s GIC agreed (and why???)
* Owners of Citigroup’s privately-placed preferred shares, which include the U.S. government, will have their holdings converted based on the price of their original investment even though the bank’s share price has collapsed since they were made.
