Citigroup requests reverse stock split

March 19, 2009 7:05:45 AM PDT
Citigroup is planning to increase the number of its common shares outstanding and execute a reverse stock split as part of its effort to convert preferred shares to common shares.

As announced late last month, Citi is seeking to exchange about $27.5 billion in public and private preferred securities as part of its agreement with the Treasury Department, which has pledged to match up to $25 billion of the conversions.

The deal represents the government's third attempt in five months to prevent the beleaguered banking giant's collapse.

The Security and Exchange Commission's website lists this definition of a reverse stock split: "A reverse stock split reduces the number of shares and increases the share price proportionately. For example, if you own 10,000 shares of a company and it declares a one for ten reverse split, you will own a total of 1,000 shares after the split. A reverse stock split has no affect on the value of what shareholders own. Companies often split their stock when they believe the price of their stock is too low to attract investors to buy their stock. "

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