Monday, November 26, 2007

Fire Sale At Citigroup...Citigroup to Get $7.5 Billion Infusion From Abu Dhabi

When you have to increase your capital with your share price at multi year lows you know that they don´t do it for charity reasons...... Nice dilution but probably the only way to stay solvent..... Now it should be clear why they are still pushing for the "Superfund" . They are simply not able to follow HSBC. I assume this time there will be no congressional hearing related to sovereign wealth funds.......Nice to see that some "experts" still focusses on the dividend.... ;-). I assume this time even FOX Business News will get it right...... :-)

Kein gutes Zeichen wenn man sichn neues Geld zu Zeiten besorgen muß wenn die Aktien auf Mehrjahrestiefs notiert. Auf gut deutsch "Denen steht das Wasser bis zum Hals". Schöne Verwässerung für die Altaktionäre aber wohl die einzige Möglichkeit solvent zu bleiben. Nun sollte auch dem letzten klar werden warum Citigroup auf Biegen und Brechen den "Superfund" pusht und nicht wie HSBC diese Gesellschaften wieder in die Bilanz aufnimmt. Ich denke das es diesesmal kein Störfeuer von der US Politik geben wird....Besonders lustig zu sehen das einige der Experten sich immer noch mit der Dividende befassen..... Ich denke diesesmal wird sogar FOX Business News richtig berichten.... :-)

Nov. 26 (Bloomberg) -- Citigroup Inc., the U.S. bank searching for a new chief executive as it faces at least $8 billion of writedowns, agreed to sell as much as 4.9 percent of the company to the government of Abu Dhabi for $7.5 billion.

Citigroup will sell equity units to the Abu Dhabi Investment Authority that convert into common shares, the New York-based lender said today in a press release.

``This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business,'' Win Bischoff, Citigroup's acting CEO, said in the statement. It helps ``strengthen our capital base,'' he said.

> It´s about time..... Wird aber auch dringend Zeit.......

Charles O. Prince III ( deaf & ingorant CEO Prince ) was forced to step down as Citigroup's chief executive officer Nov. 4 after the biggest U.S. bank said losses on subprime mortgages and related securities may cut fourth-quarter net income by $5 billion to $7 billion. The lender said at the time that it planned to shore up capital. The company's shares, which have fallen about 44 percent this year, sank to $30.70 in New York Stock Exchange composite trading today, the lowest price in five years.

Time for a review of the buybacks in 2006 Financial Highlights 2006 pdf

....our return of cash to shareholders through our $7 billion stock buyback in 2006 ( Stock was between $ 45 and $ 55....)

> Well done! Eine Meisterleistung!

ADIA, the sovereign wealth fund of the government of Abu Dhabi, is buying equity units that convert into Citigroup shares at prices ranging from $31.83 to $37.24 per share, on dates ranging from March 15, 2010, to Sept. 15, 2011, the U.S. bank said. The units will pay 11 percent annual interest.

> Here is a more detailed look via the FT Junk Citi

Citi is paying a higher interest rate than companies that borrow on the high-yield, or junk-bond, market; currently they pay roughly 9% for straight bonds. Typically, convertible bonds pay lower interest rates than straight bonds, although a particular bond’s structure could affect the interest rate paid......

Even after the spurious tax argument, it is difficult to see how this funding can be costing much less than 9 per cent.

Abu Dhabi, one of the United Arab Emirates, will have ``no role in the management or governance of Citi, including no right to designate a member'' of the company's board, according to the statement.

FT Alphaville has some more thought on The stealthy rise of the sovereign wealth fund

Von FT Alphaville gibt es ein paar mehr Gedanken zum The stealthy rise of the sovereign wealth fund

More insights from Mish , Naked Capitalism and the "Peter Schiff" of bank analysts Meredith Whitney

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Anonymous Anonymous said...

Gudda Morga,

Hast Du gesehen gestern in Spiegel Online, dass Virgin's Branson Northern Rock erwerben will?

11:19 PM  
Blogger jmf said...

Guten Morgen,

ja. Da sieht amn schön wie verzweifelt die BOE ist....

1:10 AM  
Blogger jmf said...

Citigroup Feels Heat
To Modify Mortgages / WSJ

3:59 AM  
Blogger Hellasious said...

The Abu Dhabiotes clearly see this as an opportunity to follow in the steps of the Saudi prince who bought 5% of Citi almost 15 years ago, the last time Citi was on the ropes. He became on of the wealthiest people on Earth from that move.

I have the suspicion that the new guys are not going to fare nearly as well.

4:31 AM  
Blogger jmf said...

Moin Hellasious,

after listening to this real expert
Meredith Whitney
that caused the stock plummet from over $40 to the $ 32 it looks like they are probably a bit premature....

6:10 AM  
Anonymous Anonymous said...

moin jmf,

Well, it's only money, and they have plenty. This is like me doubling down at the $5 blackjack table. They can watch their previous "investment" in Citi go up in smoke, or they can watch their dollars lose value. Not much of a choice. Rock, meet hard place.

6:36 AM  
Blogger jmf said...

Moin Edgar,


The entire topic Sovereign Wealth Fund will be one the next card that the bulls will play as an argument....

After all the others have failed....

And to some extend they are right. The SVF will be a major force for the markets down the road.

It remains to be seen which is their favourite sector and region.

In the meantime German CPI is at an 13 year high at 3 percent!!!!!!

Well done ECB.......

Good that Trichet is "VIGILANT".....

9:23 AM  

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