Citigroup Deal Gives U.S. Government 36% Stake in Company

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Citigroup Inc. will get $25 billion after it reached an agreement with the U.S. government Friday that gives the government as much as a 36 percent equity stake in the struggling bank.

It is the third rescue attempt for Citigroup in the past five months. It's contingent on private investors agreeing to a similar swap.

The U.S. government and other private investors will convert some of their preferred stock in Citi to common shares. Citi will then offer to exchange up to $27.5 billion of its existing preferred stock held by private investors at a conversion price of $3.25 per share, a 32 percent premium over Thursday's closing price of $2.46. The government will match up to $25 billion of preferred stock it currently owns for conversion at the same price.
 
Source:  Associated Press,  Citigroup Reaches Aid Deal With Government

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