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Citigroup 8-K 2009 UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR (G) OR 15(D)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): June 9,
2009
CITIGROUP INC.
(Exact
name of registrant as specified in its charter)
Registrant’s
telephone number, including area code: 212-559-1000
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
Item
8.01 Other Events.
On June
10, 2009, Citigroup Inc. announced that it finalized a definitive agreement with
the U.S. Government and will now launch its previously announced exchange offers
for publicly held convertible and non-convertible preferred and trust preferred
securities. The public exchange offers are currently scheduled to
expire on or about July 24, 2009, unless extended. Citigroup also
announced that the record date for holders of preferred securities entitled to
give written consent for certain amendments to the terms of Citigroup’s
preferred securities described in a proxy statement for that consent action is
currently scheduled to be June 16, 2009 which Citi will confirm via press
release.
A copy of
the press release announcing the events described above, among other items, is
being filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by
reference in its entirety.
Item
1.01. Entry into a Material Definitive Agreement.
Item
3.03. Material Modification to Rights of Security
Holders.
On June
9, 2009, the board of directors of Citigroup adopted a Tax Benefits Preservation
Plan (the “Plan>”). The purpose
of the Plan is to protect Citigroup’s ability to utilize certain tax assets,
such as net operating loss carryforwards and tax credits (the “Tax Benefits>”), to offset
future income. Citigroup’s use of the Tax Benefits in the future
could be significantly limited if it experiences an “ownership change” for U.S.
federal income tax purposes. In general, an “ownership change” will
occur if there is a cumulative change in Citigroup’s ownership by “5-percent
shareholders” (as defined under U.S. income tax laws) that exceeds 50 percentage points over
a rolling three-year period.
The Plan
is designed to reduce the likelihood that Citigroup will experience an ownership
change by (i) discouraging any person or group from becoming a “5-percent
shareholder” and (ii) discouraging any existing “5-percent shareholder” from
acquiring more than a specified number of additional shares of Citigroup
stock. There is no guarantee, however, that the Plan will prevent
Citigroup from experiencing an ownership change.
A corporation that experiences an
ownership change will generally be subject to an annual limitation on certain of
its pre-ownership change tax assets equal to the value of the corporation
immediately before the ownership change, multiplied by the long-term tax-exempt
rate (subject to certain adjustments), provided that the annual limitation would
be increased each year to the extent that there is an unused limitation in a
prior year. The limitation arising from an ownership change on
Citigroup’s ability to utilize the Tax Benefits depends on the value of
Citigroup’s stock at the time of the ownership change. If Citigroup’s Tax Benefits are subject
to limitation because it experiences an ownership change, depending on the value
of Citigroup’s stock at the time of the ownership change, Citigroup’s tangible
common equity might be reduced.
After
giving careful consideration to this issue, in light of the previously announced
exchange offers, Citigroup’s board of directors has concluded that the Plan is
in the best interests of Citigroup and its stockholders.
In
connection with the adoption of the Plan, on June 9, 2009, Citigroup’s board of
directors declared a dividend of one preferred stock purchase right (a “Right>”) for each outstanding
(i) share of Citigroup’s common stock and (ii) one-millionth of a share of the
Series M preferred stock (as described below, the “Interim
Securities>”). The dividend will be payable to holders of
record of Citigroup’s common stock and Interim Securities on June 22, 2009 (the
“Record
Date>”).
Each
Right will initially represent the right to purchase, for $20.00 (the “Purchase Price>”), one
one-millionth of a share of Series R Cumulative Participating Preferred Stock,
par value $1.00 per share (the “Series R Preferred
Stock>”). The terms and conditions of the Rights are set forth
in the Plan.
The
Rights will not be exercisable until the earlier of (i) the close of business on
the 10th business day after the date (the “Stock Acquisition Date>”) of
the announcement that a person has become an Acquiring Person (as defined below)
and (ii) the close of business on the 10th business day (or such later day as
may be designated by Citigroup’s board of directors before any person has become
an Acquiring Person (as defined below)) after the date of the commencement of a
tender or exchange offer by any person which could, if consummated, result in
such person
becoming
an Acquiring Person (as defined below). The date that the Rights
become exercisable is referred to as the “Distribution
Date>.”
After any
person has become an Acquiring Person (as defined below) (other than Rights
treated as beneficially owned under certain U.S. tax rules by the Acquiring
Person), each Right will generally entitle the holder to purchase for the
Purchase Price a number of shares of Series R Preferred Stock having a market
value of twice the Purchase Price.
At any
time after any person has become an Acquiring Person (but before any person
becomes the beneficial owner of 50% or more of the outstanding shares of
Citigroup’s common stock), Citigroup’s board of directors may generally exchange
all or part of the Rights (other than Rights beneficially owned under certain
U.S. tax rules by an Acquiring Person) for shares of Series R Preferred Stock at
an exchange ratio of one one-millionth of a share of Series R Preferred Stock
per Right.
The
issuance of the Rights is not taxable to holders of Citigroup’s common stock or
Interim Securities for U.S. federal income tax purposes.
Upon
conversion of the Interim Securities into common stock, any Rights associated
with such Interim Securities will be extinguished and the common stock issued
upon such conversion will be issued with Rights attached thereto.
Citigroup’s
board of directors may redeem all of the Rights at a price of $0.00001 per Right
at any time before a Distribution Date.
Prior to
the Distribution Date, the Rights will be evidenced by the certificates for (or
current ownership statements issued with respect to uncertificated shares in
lieu of certificates for) and will be transferred with, Citigroup’s common stock
and Interim Securities, and the registered holders of Citigroup’s common stock
and Interim Securities will be deemed to be the registered holders of the
Rights. After the Distribution Date, the rights agent will mail
separate certificates evidencing the Rights to each record holder of Citigroup’s
common stock and Interim Securities as of the close of business on the
Distribution Date, and thereafter the Rights will be transferable separately
from Citigroup’s common stock and Interim Securities. The Rights will
expire on June 10, 2012, unless earlier exchanged or redeemed.
At any
time prior to the Distribution Date, the Plan may be amended in any
respect. At any time after the occurrence of a Distribution Date, the
Plan may be amended in any respect that does not adversely affect Rights holders
(other than any Acquiring Person).
A Rights
holder has no rights as a stockholder of Citigroup, including the right to vote
and to receive dividends.
The Plan
includes antidilution provisions designed to maintain the effectiveness of the
Rights.
The above
summary of the Plan is qualified by the full text of the Plan being filed as
Exhibit 4.1 to this Form 8-K and incorporated herein by reference in its
entirety.
Item
1.01. Entry into a Material Definitive Agreement.
Item
3.02. Unregistered Sales of Equity Securities.
On June
10, 2009, Citigroup announced that it had entered into definitive exchange
agreements (the “Exchange
Agreements>”) with each of the U.S. Treasury and the Federal Deposit
Insurance Corporation (the “FDIC>”) in connection with the
private exchange offers previously announced on February 27, 2009.
The
following is a summary of the material terms of the Exchange
Agreements:
General>: Pursuant
to the Exchange Agreement with the U.S. Treasury, the U.S. Treasury will
exchange an amount of its preferred stock for newly issued warrants of Citigroup
and Interim Securities to match on a “dollar-for-dollar” basis with the
aggregate liquidation preference of the preferred stock exchanged by all of the
private holders of its convertible preferred stock issued in January
2008 (the “Private
Holders”) (the “U.S.
Treasury Private Transaction>”).
The U.S.
Treasury has also agreed to exchange an additional amount of its preferred stock
for Citigroup common stock to match, on a “dollar-for-dollar” basis, the
aggregate liquidation amount of the preferred securities subject to the
previously announced public exchange offers, up to an aggregate liquidation
amount of $25 billion (including securities exchanged in the U.S. Treasury
Private Transaction), at a conversion price of $3.25 per share (the “U.S. Treasury Public
Transaction>”).
Additionally,
the preferred stock held by the U.S. Treasury that is not exchanged in the U.S.
Treasury Private Transaction or the U.S. Treasury Public Transaction, together
with the preferred stock held by the FDIC, will be exchanged, contemporaneously
with the closing of the U.S. Treasury Public Transaction, for trust preferred
securities with a coupon of 8% maturing in 2039 and having other material terms
substantially similar to Citigroup’s outstanding TRUPS® (the
“USG TRUPS® Transaction”).
The
obligation of the U.S. Treasury to consummate the U.S. Treasury Private
Transaction is also subject to the fulfillment or waiver by the U.S. Treasury at
or prior to the closing of, among others, the following conditions:
The
obligation of the U.S. Treasury to consummate the U.S. Treasury Public
Transaction is also subject to the fulfillment or waiver by the U.S. Treasury,
at or prior to the closing of, among others, the following
conditions:
The
obligation of the U.S. Treasury and the FDIC to consummate the USG TRUPS® Transaction is
also subject to the fulfillment or waiver by the U.S. Treasury or the FDIC, as
applicable, at or prior to the closing of, among others, the following
conditions:
In
addition, the FDIC’s participation in the USG TRUPS® Transaction is
contingent upon, and is required to occur simultaneously with, the U.S.
Treasury’s participation in the USG TruPS® Transaction.
In the
event that the U.S. Treasury Public Transaction is not consummated due to
Citigroup’s failure to satisfy any of the applicable conditions described above,
or Citigroup announces its intention not to commence, or its decision to
terminate, the previously announced public exchange offers, then, subject to the
satisfaction or waiver by Citigroup or the U.S. Treasury or the FDIC, as
applicable, of the mutual conditions to completion of the USG TRUPS® Transaction,
at the request of the U.S. Treasury or the FDIC, as applicable, Citigroup and
the U.S. Treasury or the FDIC, as applicable, will consummate the USG TRUPS®
Transaction.
+1-877-936-2737
or outside the United States, at +1-716-730-8055, or by e-mailing a request to
docserve@citigroup.com.
Item
9.01. Financial Statements and Exhibits.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
June 10,
2009
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