Citigroup Inc *THE COMPANY AND THE US GOVERNMENT REACH AGREEMENT ON CONVERTING GOVERNMENT'S STAKE - WSJ

- US aims to convert stake to common stock valued up to $25B
- Government to convert its stake only to the extent that Citigroup can persuade private investors to do so alongside the government.
- Treasury will match the private investors conversions dollar-for-dollar up to $25B.
- US to demand boardroom shakeup, CEO Pandit expected to keep his job
- Deal expected to be announced by as early as Friday morning.
- One uncertainty is the price at which the government has agreed to convert its preferred shares into common.
- People briefed on the talks said that Citigroup was asking for the government to convert at a price of as much as $5/share (last: $2.46)
- Note: During the prior session, the WSJ reported that Citi was nearing an agreement to increase the US government's stake to as much as 40%.
- Citigroup's closing market cap was $13.4B.
- Follow Up as of 11:14 PM EST: Singapore GIC says is reportedly examining options for stake in Citigroup, GIC favors keeping preferred shares, GIC may have to convert to Citi common shares, GIC to seek premium on Citi shares if forced to convert (note: On 2/22, the WSJ reported that Citigroup was hoping to persuade private investors that have bought preferred shares (such as the Government of Singapore Investment Corp, Abu Dhabi Investment Authority and Kuwait Investment Authority) to follow the government's lead in converting some of those stakes into common stock.)

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