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C » Topics » COMMON PROXY STATEMENT

These excerpts taken from the C DEF 14A filed Jun 18, 2009.

COMMON PROXY STATEMENT

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written consent to approve each of the Common Stock Amendments in respect of the common stock to be issued to you in the Exchange Offers (the Proxy Instructions). If we accept your Public Preferred Depositary Shares or Trust Preferred Securities for exchange in the Exchange Offers, your Proxy Instructions will become irrevocable, and you will not be able to change your vote.

By tendering your Public Preferred Depositary Shares or Trust Preferred Securities in the Exchange Offers in accordance with the Letter of Transmittal, you irrevocably (i) agree and consent to all of the Common Stock Amendments, (ii) grant your Proxy Instructions to BNY Mellon Trust of Delaware, as trustee (the Voting Trustee) of the voting trust (the Voting Trust) established pursuant to the voting trust agreement, dated June 15, 2009 (the Voting Trust Agreement), (iii) subject to and effective upon acceptance for exchange of your tendered Public Preferred Depositary Shares or Trust Preferred Securities, agree to the terms of the Voting Trust Agreement and (iv) acknowledge that by tendering your Public Preferred Depositary Shares or Trust Preferred Securities, you will become a party to the Voting Trust Agreement. The shares of common stock issued pursuant to the Exchange Offers will be delivered to the Voting Trust on the settlement date of the Exchange Offers to be held in trust. The Voting Trustee, pursuant to the terms of the Voting Trust Agreement, will execute and deliver an irrevocable proxy in respect of such shares of common stock to the individuals named in the Voting Trust Agreement to execute a written consent in favor of the Common Stock Amendments. The shares of common stock exchanged for your tendered Public Preferred Depositary Shares or Trust Preferred Securities will thereafter within one business day be released from the Voting Trust and will be distributed to you.

In order to save the expense associated with holding a special meeting, the board of directors has elected to obtain stockholder approval of the amendments described above by written consent pursuant to Section 228 of the Delaware General Corporation Law, rather than by calling a meeting of stockholders. In addition to soliciting Proxy Instructions from holders of Public Preferred Depositary Shares and Trust Preferred Securities, we will also solicit proxies from all of the other holders as of the Record Date (as defined below) of our common stock to authorize the individuals designated by Citigroup on the enclosed proxy card to execute a written consent in favor of the Common Stock Amendments.

Granting your Proxy Instructions pursuant to the Letter of Transmittal to approve the Common Stock Amendments is important for the success of the transactions that we announced on February 27, 2009 to strengthen our tangible common equity (TCE) and Tier 1 Common (see “Background of the Transactions” below). We are pleased to report that we have already made great progress in implementing the transactions (the Transactions):

 

  •  

on March 18, 2009, we entered into definitive agreements with all of the private holders (the Private Holders) of our convertible preferred stock issued in January 2008 to exchange an aggregate of $12.5 billion in liquidation preference of convertible preferred stock held by the Private Holders into approximately 3,846 shares of our newly-created Series M Common Stock Equivalent (the Interim Securities) and warrants to acquire approximately 395 million shares of our common stock at a price of $0.01 per share (the Private Holders Transactions);

 

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on June 9, 2009, we entered into a definitive agreement with the U.S. Department of the Treasury (U.S. Treasury) (i) to exchange an aggregate of $12.5 billion in liquidation preference of preferred stock held by U.S. Treasury into approximately 3,846 shares of Interim Securities and warrants to acquire 395 million shares of our common stock at a price of $0.01 per share and (ii) to exchange for additional Interim Securities an additional number of shares of preferred stock with an aggregate liquidation preference equal to the aggregate liquidation preference or amount of Public Preferred Depositary Shares and Trust Preferred Securities tendered and accepted for exchange in the Exchange Offers in an aggregate amount of up to $12.5 billion. Under the definitive agreement entered into with U.S. Treasury and the definitive agreement entered into on June 9, 2009 with the Federal Deposit Insurance Corporation (FDIC), any remaining preferred stock held by U.S. Treasury and all preferred stock held by the FDIC will be exchanged into a new series of 8% trust preferred securities (the USG Transactions, and together with the Private Holders Transactions, the USG/Private Holders Transactions);

 

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we have commenced exchange offers (the Exchange Offers) pursuant to which we are offering to exchange newly issued shares of our common stock for (i) any and all issued and outstanding Public Preferred Depositary Shares and (ii) Trust Preferred Securities. In the case of the Trust Preferred Securities, due to a limitation on the number of our authorized but unissued shares of common stock, we will be able to accept only a limited amount of Trust Preferred Securities for exchange in the Exchange Offers. Specifically, we will be able to accept for exchange a number of Trust Preferred Securities with a liquidation amount equal to approximately $5.6 billion plus the amount of the liquidation preference of Public Preferred Depositary Shares that are not tendered and accepted for exchange in the Exchange Offers, subject to an overall cap on Public Preferred Depositary Shares and Trust Preferred Securities that may be accepted for exchange of $20.5 billion in liquidation preference or amount; and

 

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we have mailed a separate Notice of Solicitation of Written Consents and accompanying proxy statement (the Preferred Proxy Statement) to holders of our Public Preferred Depositary Shares and common stock, seeking their proxy or voting instructions to execute a written consent to eliminate certain rights of holders of preferred stock, to clarify certain matters related to the retirement of preferred stock and to increase the amount of authorized preferred stock (the Public Preferred Stock Amendments). If you were a holder of Public Preferred Depositary Shares on the record date for the Preferred Proxy Statement and you are tendering your Public Preferred Depositary Shares in connection with the Exchange Offers, you must follow the procedures contained in the Letter of Transmittal to provide instructions to deliver a proxy to execute a written consent to approve the Common Stock Amendments and the Preferred Stock Amendments in order to have your Public Preferred Depositary Shares accepted for exchange. For more information, please see the Preferred Proxy Statement and the Prospectus.

We believe that the Common Stock Amendments will benefit the holders of our common stock. If the Authorized Share Increase is not approved, commencing approximately 6 months from the date on which the Interim Securities are issued to the Private Holders and the USG (the Trigger Date), each Interim Security will bear an annual cumulative dividend equal to the greater of (i) 9%, increasing each quarter by 2 percentage points per quarter up to a maximum of 19% per annum and (ii) the dividend actually paid on the number of shares of common stock into which such Interim Security is convertible. The Interim Securities will generally have the same voting rights as the common stock, except that they have no voting rights with respect to the Common Stock Amendments, and will vote together as one class with holders of the common stock except as otherwise provided by applicable law. The Interim Securities will not vote on any of the matters that are the subject of the Preferred Proxy Statement. The warrants issued to the Private Holders and the USG will become exercisable only after the Trigger Date if the Authorized Share Increase is not approved by our stockholders, and will automatically expire if our stockholders approve the Authorized Share Increase. Approval of the Authorized Share Increase will cause each Interim Security to convert into one million shares of common stock, thus increasing our TCE and Tier 1 Common, decreasing our expenses associated with dividends paid on preferred stock and eliminating the dilution of common stockholders that would result from the exercise of the warrants. The Reverse Stock Split will allow us to restore our common stock price to a normalized trading level, which will enhance liquidity. The Reverse Stock Split will also allow us to reduce certain of our transaction costs (e.g., proxy solicitation fees). The Preferred Stock Change will provide the board of directors with important flexibility to adopt amendments to our restated certificate of incorporation (including certificates of designation for series of preferred stock) that affect only the terms of preferred stock, which is consistent with the board’s current flexibility to create new series of preferred stock.

COMMON PROXY STATEMENT

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Common (see “Background to the Transactions” below). We are pleased to report that we have already made great progress in implementing the transactions (the Transactions):

 

  •  

on March 18, 2009, we entered into definitive agreements with all of the private holders (the Private Holders) of our convertible preferred stock issued in January 2008 to exchange an aggregate of $12.5 billion in liquidation preference of convertible preferred stock held by the Private Holders into approximately 3,846 shares of our newly-created Series M Common Stock Equivalent (the Interim Securities) and warrants to acquire approximately 395 million shares of our common stock at a price of $0.01 per share (the Private Holders Transactions);

 

  •  

on June 9, 2009, we entered into a definitive agreement with the U.S. Department of the Treasury (U.S. Treasury), (i) to exchange an aggregate of $12.5 billion in liquidation preference of preferred stock held by U.S. Treasury into approximately 3,846 shares of Interim Securities and warrants to acquire 395 million shares of our common stock at a price of $0.01 per share, and (ii) to exchange for additional Interim Securities an additional number of shares of preferred stock with an aggregate liquidation preference equal to the aggregate liquidation preference or amount of Public Preferred Depositary Shares and Trust Preferred Securities tendered and accepted for exchange in the Exchange Offers in an aggregate amount up to $12.5 billion. Under the definitive agreement entered into with U.S. Treasury and the definitive agreement entered into on June 9, 2009 with the Federal Deposit Insurance Corporation (FDIC), any remaining preferred stock held by U.S. Treasury and all preferred stock held by the FDIC will be exchanged into a new series of 8% trust preferred securities (the USG Transactions, and together with the Private Holders Transactions, the USG/Private Holders Transactions);

 

  •  

we have commenced exchange offers (the Exchange Offers) pursuant to which we are offering to exchange newly issued shares of our common stock for (i) any and all issued and outstanding depositary shares representing fractions of shares of our Series F, Series E, Series AA and Series T preferred stock (the Public Preferred Depositary Shares) and (ii) certain series of the trust preferred securities (the Trust Preferred Securities) described in the preliminary prospectus included in our registration statement on Form S-4 (Registration No. 333-158100) filed with the Securities and Exchange Commission on June 18, 2009. In the case of the Trust Preferred Securities, due to a limitation on the number of our authorized but unissued shares of common stock, we will be able to accept only a limited amount of Trust Preferred Securities for exchange in the Exchange Offers. Specifically, we will be able to accept for exchange a number of Trust Preferred Securities with a liquidation amount equal to approximately $5.6 billion plus the amount of the liquidation preference of Public Preferred Depositary Shares that are not tendered and accepted for exchange in the Exchange Offers, subject to an overall cap on Public Preferred Depositary Shares and Trust Preferred Securities that may be accepted for exchange of $20.5 billion in liquidation preference or amount; and

 

  •  

we have mailed a separate Notice of Solicitation of Written Consents and accompanying proxy statement (the Preferred Proxy Statement) to holders of our Public Preferred Depositary Shares and common stock, seeking their proxy or voting instructions to execute a written consent to eliminate certain rights of holders of preferred stock, to clarify certain matters related to the retirement of preferred stock and to increase the amount of authorized preferred stock.

We believe that the Common Stock Amendments will benefit the holders of our common stock. If the Authorized Share Increase is not approved, commencing approximately 6 months from the date on which the Interim Securities are issued to the Private Holders and the USG (the Trigger Date), each Interim Security will bear an annual cumulative dividend equal to the greater of (i) 9%, increasing each quarter by 2 percentage points per quarter up to a maximum of 19% per annum and (ii) the dividend actually paid on the number of shares of common stock into which such Interim Security is convertible. The Interim Securities will also generally have the same voting rights as the common stock, except that they have no voting rights with respect to the Common Stock Amendments, and will vote together as one class with holders of the common stock except as otherwise provided by applicable law. The Interim Securities will not vote on any of the matters that are the subject of the Preferred Proxy Statement. The warrants issued to the Private Holders and the USG will become exercisable only after the Trigger Date if the Authorized Share Increase is not approved by our stockholders, and will

 

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automatically expire if our stockholders approve the Authorized Share Increase. Approval of the Authorized Share Increase will cause each Interim Security to convert into one million shares of common stock, thus increasing our TCE and Tier 1 Common, decreasing our expenses associated with dividends paid on preferred stock, and eliminating the dilution of common stockholders that would result from the exercise of the warrants. The Reverse Stock Split will allow us to restore our common stock price to a normalized trading level, which will enhance liquidity. The Reverse Stock Split will also allow us to reduce certain of our transaction costs (e.g., proxy solicitation fees). The Preferred Stock Change will provide the board of directors with important flexibility to adopt amendments to our restated certificate of incorporation (including certificates of designation for series of preferred stock) that affect only the terms of preferred stock, which is consistent with the board’s current flexibility to create new series of preferred stock.

COMMON PROXY STATEMENT

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By tendering your Public Preferred Depositary Shares or Trust Preferred Securities in the Exchange Offers in accordance with the Letter of Transmittal, you irrevocably (i) agree and consent to all of the Common Stock Amendments, (ii) grant your Proxy Instructions to BNY Mellon Trust of Delaware, as trustee (the Voting Trustee) of the voting trust (the Voting Trust) established pursuant to the voting trust agreement, dated June 15, 2009 (the Voting Trust Agreement), (iii) subject to and effective upon acceptance for exchange of your tendered Public Preferred Depositary Shares or Trust Preferred Securities, agree to the terms of the Voting Trust Agreement and (iv) acknowledge that by tendering your Public Preferred Depositary Shares or Trust Preferred Securities, you will become a party to the Voting Trust Agreement. The shares of common stock issued pursuant to the Exchange Offers will be delivered to the Voting Trust on the settlement date of the Exchange Offers to be held in trust. The Voting Trustee, pursuant to the terms of the Voting Trust Agreement, will execute and deliver an irrevocable proxy in respect of such common stock to the individuals named in the Voting Trust Agreement to execute a written consent in favor of the Common Stock Amendments. The shares of common stock exchanged for your tendered Public Preferred Depositary Shares or Trust Preferred Securities will thereafter within one business day be released from the Voting Trust and will be distributed to you.

In order to save the expense associated with holding a special meeting, the board of directors has elected to obtain stockholder approval of the amendments described above by written consent pursuant to Section 228 of the Delaware General Corporation Law, rather than by calling a meeting of stockholders. We are soliciting Proxy Instructions pursuant to the Letter of Transmittal from holders of Public Preferred Depositary Shares and Trust Preferred Securities. Only holders of record of Public Preferred Depositary Shares or Trust Preferred Securities, who validly tendered their securities pursuant to the Exchange Offers, are entitled to grant Proxy Instructions pursuant to the Letter of Transmittal with respect to the Common Stock Amendments. Accordingly, if you are a holder of Public Preferred Depositary Shares or Trust Preferred Securities, in order to give your Proxy Instruction in respect of the shares of common stock to be issued to you pursuant to the Exchange Offers, you must tender your Public Preferred Depositary Shares or Trust Preferred Securities and give your Proxy Instructions by complying with the requirements and following the procedures set forth in the Letter of Transmittal. In order to participate in the Exchange Offers, you must grant your Proxy Instructions pursuant to the Letter of Transmittal.

If you hold your Public Preferred Depositary Shares or Trust Preferred Securities through a bank, broker, custodian or other nominee and wish to participate in the Exchange Offers, please contact your bank, broker, custodian or other nominee to instruct it to tender your Public Preferred Depositary Shares or Trust Preferred Securities in accordance with the instructions in the Prospectus and the Letter of Transmittal and grant your Proxy Instructions pursuant to the Letter of Transmittal. Due to the time required for your bank, broker, custodian or other nominee to complete the required actions on your part, we urge you to contact your bank, broker, custodian or other nominee at least five business days prior to the expiration date of the Exchange Offers.

COMMON PROXY STATEMENT

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card must be received prior to the close of business on September 2, 2009 (the Proxy Deadline). The board of directors may, subject to applicable law, extend the Proxy Deadline in its sole discretion. We will announce any extension of the Proxy Deadline by issuing a press release. If you hold your common stock through a bank, broker, custodian or other nominee, please contact your bank, broker, custodian or other nominee to instruct it to grant a proxy on your behalf with respect to each of the Common Stock Amendments.

If you held Public Preferred Depositary Shares or Trust Preferred Securities, we previously sent you a copy of this proxy statement in connection with the Exchange Offers. ANY PREVIOUSLY GRANTED PROXY INSTRUCTIONS GIVEN WITH RESPECT TO YOUR PUBLIC PREFERRED DEPOSITARY SHARES OR TRUST PREFERRED SECURITIES WILL NOT HAVE ANY EFFECT WITH RESPECT TO SHARES OF COMMON STOCK THAT WERE NOT ISSUED IN THE EXCHANGE OFFERS. IN ORDER TO TAKE ACTION ON THE COMMON STOCK AMENDMENTS WITH RESPECT TO SHARES OF COMMON STOCK THAT WERE NOT ISSUED IN THE EXCHANGE OFFERS, YOU MUST COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE OR VOTE BY TELEPHONE OR INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD.

Regardless of the number of shares you own, your proxy is important. If you hold your shares through a bank, broker, custodian or other nominee, please contact your bank, broker, custodian or other nominee to instruct it to submit a proxy on your behalf. Due to the time required for your nominee to complete the required actions on your part, we urge you to contact your nominee at least five business days prior to the Proxy Deadline.

EXCERPTS ON THIS PAGE:

DEF 14A (4 sections)
Jun 18, 2009

RELATED TOPICS for C:

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