Citi Gets Third Rescue as U.S. Plans to Raise Stake
The U.S. government ratcheted up its effort to save Citigroup Inc., agreeing to a third rescue attempt that will cut existing shareholders’ stake in the company by 74 percent. The stock fell as much as 37 percent.
The Treasury Department said it would convert as much as $25 billion of preferred shares into common stock provided private holders agree to the same terms, the government said in a statement today. The conversion would give the U.S. a 36 percent stake in the New York-based company.
“We’re in these dire conditions, and this is a restructuring of a troubled company,” CreditSights Inc. analyst David Hendler said. “Common shareholders are severely diluted.”