Citi to Sell $7.5 Billion of Equity Units to the Abu Dhabi Investment Authority
New York – Citi announced today that it has reached an agreement to sell Equity Units, with mandatory conversion into common shares, in a private placement to the Abu Dhabi Investment Authority (ADIA), a long-term investor committed to the U.S. capital markets, in the amount of $7.5 billion. ADIA’s aggregate ownership in Citi’s common shares, including the conversion of these Equity Units, will total no more than 4.9% of Citi’s total shares outstanding.
“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,” said Win Bischoff, Citi’s Acting Chief Executive Officer. "It builds on a series of actions we have taken over the past several months to strengthen our capital base, which have included sales of certain non-strategic assets, the issuance of trust preferred securities, and the previously announced plan to use common stock to purchase 32% of Nikko Cordial in Japan. In addition, ADIA is a significant participant in alternative investments and emerging markets financial services, two areas in which we have major positions and have been expanding.
“This investment also enables us to access capital in an efficient manner, and is consistent with our strategy of maintaining a balance sheet that benefits from highly diverse sources of funding in terms of both geography and type of security,” Mr. Bischoff continued.
“Citi possesses a unique position in the financial markets throughout the world. We see in Citi a highly respected company with a premier brand and with tremendous opportunities for growth,” said ADIA’s Managing Director, Sheikh Ahmed Bin Zayed Al Nahayan. “This investment reflects our confidence in Citi’s potential to build shareholder value.”
ADIA has agreed not to own more than a 4.9% stake in Citi, and will have no special rights of ownership or control and no role in the management or governance of Citi, including no right to designate a member of the Citi Board of Directors.
Substantially all of the investment proceeds will be treated as Tier 1 capital for regulatory capital purposes. Accordingly, it will support Citi’s progress toward its goal of achieving its targeted capital ratios by the end of the first half of 2008. The investment is expected to close within the next several days.
Each Equity Unit is mandatorily convertible into Citi shares at prices ranging from $31.83 to $37.24 per share. The Equity Units convert to Citi common shares on dates ranging from March 15, 2010, to September 15, 2011, subject to adjustment. Each Equity Unit will pay a fixed annual payment rate of 11%, payable quarterly. The payment rate reflects market terms based on the conversion premium as well as Citi’s current dividend yield. Additional details of the Equity Units are provided in an attachment to this release.
The Abu Dhabi Investment Authority (ADIA) is a well-established, well-respected institutional investor committed to the stability of the global financial infrastructure. It is the sovereign wealth fund of the government of Abu Dhabi, one of the seven emirates that comprise the federation of the UAE.
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