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Citigroup (NYSE: C) is recently trading at $3.42 in pre-open trading, above its close of $3.08. C plans to seek shareholder approval to both increase the number of shares outstanding and undertake a reverse stock split as part of the company's effort to exchange common stock fro preferred securities. C announced on February 27 "Citi will offer to exchange common stock for up to $27.5 billion of its existing preferred securities and trust preferred securities at a conversion price of $3.25 a share. The U.S. government will match this exchange up to a maximum of $25 billion face value of its preferred stock at the same conversion price." C March 4 straddle closed at $1.19, April 4 straddle is priced at $1.06, June 4 straddle is priced at $2.60 according to Track Data, suggesting large price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
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Reader Comments (Page 1 of 1)
3-19-2009 @ 10:14AM
Dan Barnett said...
"C plans to seek shareholder approval to both increase the number of shares outstanding and undertake a reverse stock split as part of the company's effort to exchange common stock fro preferred securities."
Okay, I'm missing something. I thought the point of doing a reverse split is to take shares off the market. Why increase shares outstanding at the same time?