UPDATE 3-U.S. delays its $5 bln Citi sale after weak pricing
NEW YORK/WASHINGTON, Dec 16 - The U.S. Treasury delayed a plan to sell its $5 billion of Citigroup Inc shares after a stock offering by the bank attracted weak demand and priced at a much lower-than-expected $3.15 a share.
The bank sold $20 billion of stock and convertible bonds to repay funds it owes to the government so it can avoid the executive compensation restrictions that came with multiple U.S. bailouts.
But raising that capital came at a steep cost to shareholders, whose shares are worth 20 percent less than their closing level on Friday, before the bank announced its plan for repaying funds to the government.
"It's a terrific deal for Citigroup's managers, who can get paid more, and a terrible deal for shareholders. The company paid a huge price for this capital," said Sean Egan, principal at ratings agency Egan-Jones Ratings.
couple this with the fact that citigroup gets a big tax break courtesy of the taxpayers:
The Washington Post is reporting that the federal government has quietly decided to exempt Citigroup (C) from a large future tax bill in allowing it to exit the TARP program. This is a backdoor bailout worth billions and is an outrage that demonstrates the lengths to which government will go to gift these organizations taxpayer money.