Citigroup, Inc. (NYSE: C) is going to have a very active day ahead of it. The troubled banking giant has just announced that its common stockholders approved the three resolutions submitted in its Common Proxy Statement dated June 18, 2009. If Citi does not need a reverse split just to chop down the number of shares, then no company ever did. The company has been authorized to effect a reverse split, although it is not required to, in the new situation. And Uncle Sam now owns 33.6% of the company.
The approved resolutions increase the number of authorized shares of Citi’s common stock to 60 billion shares. This also eliminates the right of the holders of common stock to vote on any amendment to the restated certificate of incorporation that relates solely to the terms of any series of preferred stock.
The approval was authorized, but again does not require, Citi’s board of directors to effect a reverse stock split at one of seven ratios any time prior to June 30, 2010.
The warrants to purchase shares of Citi common stock issued on July 23, 2009 to the U.S. government and certain private holders have become null and void. Tax payers should not be offended though, as Uncle Sam is now the largest shareholder….
Citi can now convert the U.S. government and certain private holders’ interim securities to common stock to complete the previously announced share exchange and the mandatory conversion will be effective at the close of on September 10, 2009. After that Citi will have approximately 22,880,304,796 shares of common stock outstanding (over 22 billion, ouch). The U.S. government will own 7,692,307,692 shares, a figure which comes to 33.6% of the outstanding shares of Citi.
Citi is bouncing along with many other financial stocks. At 9:37 AM EST we have seen over 80 million shares trade hands and the stock is up almost 5% at $4.78.
JON C. OGG
SEPTEMBER 3, 2009
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