The U.S. Treasury Department announced that it's planning to sell another 1.5 billion shares of Citigroup (C) common stock, part of its effort to recoup some of the $700 billion it invested in bailing out the financial system. This is the third trading plan, and follows the government's previous announcement on July 1, when Treasury said it had sold 1.1 billion shares.
Treasury said it has entered into a pre-arranged written trading plan under which Morgan Stanley (MS) will sell the shares under certain parameters.
Citigroup got $25 billion from the government at the height of the financial crisis to help it remain afloat. In exchange, the Treasury received preferred stock, which it later converted into 7.7 billion shares of Citigroup at a price of $3.25 per common share.
So far, it has sold a total of approximately 2.6 billion shares of Citigroup common stock at an average price per share of $4.03, and has received total gross proceeds of approximately $10.5 billion from the sale.
The Treasury currently owns approximately 5.1 billion shares of Citigroup common stock, or 18% of outstanding shares, and expects to continue selling its stake in the company in an orderly fashion, it said.
This third trading plan will terminate on Sept. 30, ahead of the blackout period when Citi is to report third-quarter results, even if all shares have not been sold by that time.
Citigroup recently reported a 37% drop in second-quarter net income and a 33% revenue drop as securities and banking revenue tumbled 26%. Shares of Citigroup fell about 1.5% in premarket trading to $4.03.
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