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C » Topics » PREFERRED PROXY STATEMENT

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

PREFERRED PROXY STATEMENT

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8.400% Fixed Rate/Floating Rate Non-Cumulative Preferred Stock, Series E (Series E); 8.125% Non-Cumulative Preferred Stock, Series AA (Series AA); and 6.500% Non-Cumulative Convertible Preferred Stock, Series T (Series T and, collectively, the Public Preferred Stock) that you held as of the close of business on June 16, 2009, 2009 (the Record Date). As described in our preliminary prospectus included in our registration statement on Form S-4 (Registration No. 333-158100), filed with the Securities and Exchange Commission (SEC) on June 18, 2009 (the Prospectus), of which the enclosed proxy statement is a part, we will not accept your Public Preferred Depositary Shares for exchange unless you follow the procedures contained in the letter of transmittal relating to the applicable Exchange Offer (the Letter of Transmittal) to make a Tendering Certification or grant your Tendering Voting Instruction in favor of each of the Public Preferred Stock Amendments. If we accept your Public Preferred Depositary Shares for exchange, your Tendering Voting Instruction will become irrevocable and you will be unable to change your vote. If you do not wish to tender your Public Preferred Depositary Shares in an Exchange Offer, but you wish to take action in favor of or against any Public Preferred Stock Amendment, you may give a Non-Tendering Voting Instruction (as defined below) by following the instructions using the detachable voting instruction form provided in the Letter of Transmittal.

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 proxies and Voting Instructions to execute written consents from all of our holders as of the Record Date of common stock and Public Preferred Depositary Shares, respectively.

Granting your Voting Instruction to execute a written consent to approve the Public Preferred 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 proposed 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 the Public Preferred Depositary Shares and Trust Preferred Securities (as defined below) 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);

 

  •  

we have commenced public 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) certain series of the trust preferred securities (the Trust Preferred Securities) as described in the Prospectus. 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

 

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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 Common Proxy Statement) to holders of our Public Preferred Depositary Shares and Trust Preferred Securities, seeking their proxy instructions to execute written consents in favor of the amendments to our restated certificate of incorporation increasing our authorized share capital, approving a reverse stock split and eliminating the right of holders of our common stock to vote on any amendment to the restated certificate of incorporation (including any certificate of designation related to any series of preferred stock) that relates solely to the terms of one or more outstanding series of preferred stock (the Common Stock Amendments). When you tender your Public Preferred Depositary Shares, you must follow the instructions in the Letter of Transmittal to provide instructions to deliver a proxy to execute a written consent to approve the Public Preferred Stock Amendments and the Common Stock Amendments in order to have your Public Preferred Depositary Shares accepted for exchange. For more information, please see the Common Proxy Statement and the Prospectus.

We believe that the Public Preferred Stock Amendments are in the best interests of our stockholders and are important to achieving the overarching goal of increasing our TCE and Tier 1 Common. The Dividend Blocker Amendment, if it becomes effective, will allow us to pay dividends on our common stock even if full dividends on the Public Preferred Stock have not been paid or declared and set apart for payment, which we believe will enhance the price and liquidity of our common stock. The Director Amendment, if it becomes effective, will eliminate the possibility that non-exchanging holders of Public Preferred Depositary Shares could exercise a level of influence and control over the governance and the management of our company that is disproportionate to their remaining economic interest. The Retirement Amendment and the Authorized Preferred Stock Increase, if they become effective, will allow us greater flexibility in deciding the terms of securities to be issued in any future financing and in otherwise taking steps to maximize the efficiency of our overall capital structure.

The changes proposed by the Director Amendment will not take effect with respect to any series of Public Preferred Depositary Shares unless and until we delist any Public Preferred Depositary Shares of that series that remain outstanding following the completion of the Exchange Offers. Since the Series E Public Preferred Depositary Shares are not listed on any exchange, the Director Amendment, if approved, will become effective with respect to the Series E Public Preferred Stock immediately upon the filing of the Director Amendment with the Secretary of State of the State of Delaware. We currently intend to seek to delist and/or, to the extent permitted by law, deregister the Public Preferred Stock and Public Preferred Depositary Shares after completion of the Exchange Offers.

The board of directors has unanimously approved and declared advisable each of the Dividend Blocker Amendment, the Director Amendment, the Retirement Amendment and the Authorized Preferred Stock Increase and unanimously recommends that you give your Voting Instruction to execute a written consent to approve each of the Dividend Blocker Amendment, the Director Amendment, the Retirement Amendment and the Authorized Preferred Stock Increase.

In order to validly tender your Public Preferred Depositary Shares in the Exchange Offers, you must: (1) if you were a record holder of your Public Preferred Depositary Shares as of the Record Date, give a voting instruction, in the manner specified in the Letter of Transmittal, with respect to such Public Preferred Depositary Shares, instructing The Bank of New York Mellon (BONY), as depositary, to grant a proxy to execute a written consent in favor of each of the Public Preferred Stock Amendments, or (2) if you were a beneficial owner of Public Preferred Depositary Shares as of the Record Date, contact your bank, broker, custodian or other nominee promptly and instruct it to give to BONY, as depositary, a voting

 

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PREFERRED PROXY STATEMENT

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proxies to execute written consents from all of our holders of common stock as of the Record Date. We are also soliciting Voting Instructions (as defined in this proxy statement) from our holders as of the Record Date of the depositary shares (Public Preferred Depositary Shares) representing the Public Preferred Stock.

Granting your proxy authorizing the individuals pre-printed on the enclosed proxy card to execute a written consent to approve the Public Preferred 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 proposed 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 the Public Preferred Depositary Shares and Trust Preferred Securities (as defined below) 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);

 

  •  

we have commenced public 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) certain series of the trust preferred securities (the Trust Preferred Securities) as described in the Prospectus. 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 Depository 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 Common Proxy Statement) to holders of our Public Preferred Depositary Shares and Trust Preferred Securities, seeking their proxy instructions to execute written consents in favor of amendments to our restated certificate of incorporation increasing our authorized share capital, approving a reverse stock split and eliminating the right of holders of our common stock to vote on any amendment to the restated certificate of incorporation (including any certificate of designation related to any series of preferred stock) that relates solely to the terms of one or more outstanding series of preferred stock (the Common Stock Amendments). On or about the record date for the Common Stock Amendments, which will be the settlement date for the Exchange Offers, we will mail the Common Proxy Statement to holders of our common stock, seeking their proxy instructions to execute written consents in favor of the Common Stock Amendments. For more information, please see the Common Proxy Statement and the Prospectus.

 

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We believe that the Public Preferred Stock Amendments are in the best interests of our stockholders and are important to achieving the overarching goal of increasing our TCE and Tier 1 Common. The Dividend Blocker Amendment, if it becomes effective, will allow us to pay dividends on our common stock even if full dividends on the Public Preferred Stock have not been paid or declared and set apart for payment, which we believe will enhance the price and liquidity of our common stock. The Director Amendment, if it becomes effective, will eliminate the possibility that non-exchanging holders of Public Preferred Depositary Shares could exercise a level of influence and control over the governance and the management of our company that is disproportionate to their remaining economic interest. The Retirement Amendment and the Authorized Preferred Stock Increase, if they become effective, will allow us greater flexibility in deciding the terms of securities to be issued in any future financing and in otherwise taking steps to maximize the efficiency of our overall capital structure. As a holder of our common stock, it is in your best interest to grant your proxy to execute a written consent in favor of each of the Public Preferred Stock Amendments to allow the board of directors greater flexibility in deciding to reinstate dividends on your common stock even if we have not paid dividends on the Public Preferred Stock.

The changes proposed by the Director Amendment will not take effect with respect to any series of Public Preferred Depositary Shares unless and until we delist any Public Preferred Depositary Shares of that series that remain outstanding following the completion of the Exchange Offers. Since the Series E Public Preferred Depositary Shares are not listed on any exchange, the Director Amendment, if approved, will become effective with respect to the Series E Public Preferred Stock immediately upon the filing of the Director Amendment with the Secretary of State of the State of Delaware. We currently intend to seek to delist and/or, to the extent permitted by law, deregister the Public Preferred Stock and Public Preferred Depositary Shares after completion of the Exchange Offers.

The board of directors has unanimously approved and declared advisable each of the Dividend Blocker Amendment, the Director Amendment, the Retirement Amendment and the Authorized Preferred Stock Increase and unanimously recommends that you grant a proxy to the individuals named in the enclosed proxy card to execute a written consent to approve each of the Dividend Blocker Amendment, the Director Amendment, the Retirement Amendment and the Authorized Preferred Stock Increase.

If you are a record holder of common stock outstanding and entitled to vote on the Record Date, you are urged to complete, date and sign the enclosed proxy card and promptly return it in the enclosed postage-prepaid envelope or vote by telephone or Internet by following the instructions on the enclosed proxy card. To be counted, your dated and signed proxy card must be received at or before 5:00 p.m. New York Time, on the expiration date of the Exchange Offers, currently anticipated to be July 24, 2009 (the Proxy Deadline), subject to extension by Citigroup. 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 Dividend Blocker Amendment, the Director Amendment, the Retirement Amendment and the Authorized Preferred Stock Increase.

EXCERPTS ON THIS PAGE:

DEF 14A (2 sections)
Jun 18, 2009

RELATED TOPICS for C:

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