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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Perspective who wrote (196190)4/13/2009 10:40:52 PM
From: RockyBalboaRead Replies (2) of 306849
 
Here - conversion is not off - just let it ride, then short.

Message 25503367

Traders say that Citi shares could fall once the exchange offer is complete, which is expected in about a month. That's because of the DILUTION created by the additional common shares.

Citi is expected to file information on the exchange offer with the Securities and Exchange Commission in the next few days.

In a bid to boost its depleted tangible common equity, Citi announced an exchange offer involving some $25 billion of preferred held by the government under the TARP program, some $12.5 billion of preferred held by a group of private investors, including Saudi Prince Alaweed, and $14.9 billion of publicly held preferred.

Citi shares fell sharply in the wake of that announcement, dropping to under $1 from $2.50 as investors banked on massive DILUTION of existing common holders. Citi's shares outstanding are expected to rise to about 22 billion from 5.5 billion once the roughly $52 billion of preferred is converted into common shares. The preferred exchange offer is voluntary but the vast majority of public holders are expected to participate. The Treasury Department also is planning to participate.
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