The bailed out Citigroup was exited by the US government when it sold the last shares it owned in the company for 4.35 dollars each.
The price for 2.4 billion shares was 10 cents below the last trading price on the NYSE, of 4.45 dollars. The US Treasury said it would make up to 10.5 billion dollars by selling the shares.
Tim Massad, a financial stability expert in the Treasury said the government made profit for the tax-payers from the sale of the shares. He further said that the sale was a positive step in recovering the taxpayer’s money and getting the government out of the private businesses.
The company has already paid 20 billion dollars in stock and a further 7.7 billion shares were issued against 25 billion held by the Treasury, completing the 45 billion dollars used to bail out the company during 2008 and 2009.
The stakes were brought down from 27 percent to 7 percent in the last year, through controlled market sales.
After last month’s successful public auction of GM, this is another large offering. GM generated huge interest from local as well as international investors.
Citigroup spokesperson Jon Diat said in a statement that the company was pleased to announce that the US government was pulling out of the company. He thanked the Treasury for its help during torrid times.
Morgan Stanley conducted the offering, which is expected to close on December 10, 2010. Citigroup will pay the underwriting fees.
The profit of 12 billion dollars from the 45 billion dollars includes the sale of common stock of around 6.85 billion, interest and dividends of 2.9 billion dollars and Trust Preferred Securities of 2.2 billion dollars, the Treasury said.
The average price for the 7.7 billion shares of the company was about 4.14 dollars each. The shares were received at a conversion rate of 3.25 dollars each.
The treasury still holds warrant to buy Citigroup shares it issued to bail it out, so the company is still in the hands of the Treasury. The shares can be bought back by Citigroup or traded for additional profit.
If the FDIC does not have any loss on Citigroup debit, then the Treasury is to receive 800 billion dollars as Trust Preferred Securities from the FDIC under a debt guarantee program.
AIG is said to be the next in the list, as the Treasury looks to sell its stake in the company, and it expects profit from the sale.