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It seems that Citigroup (stick ticker: C) expects a 58.000 million dollar conversion to be done this week (24-30 June 2009). This postponed conversion was suposed to be achieved a few weeks ago, as part of the plan that will give the US Government a 34% stake.

After suffering 36.000 millon losses over the last semester, Citi announced that they will give priority to make this conversion happen assoon as possible, since they need to raise capital.The plan was to offer 52.500 millons in preferred shares, including 25.000 million of the TARC Program (toxic assets), at a conversion price of 3,25 dollars per share. This offer has an expiration date of July 24th.

Some weeks ago, when this was announced, Citi was trading at a price of 1,35 per share. But obviously no sane investor would pay 3,25 for shares that they could buy in the open market for just 1,35. Now, Citi is trading at a price of 2,99 a share. Buying this shares now makes sense, since you would have a 5% bonus in the eventual conversion date. Also, to induce investors to make this conversion, Citigroup said they would suspend all dividends to common and preferred shares, except of the trust preferred securities.

Bottom line, this might be an attractive opportunity. Some investors are preparing for this conversion, buying preferred Citi shares and short selling common shares, a commonly coverage strategy.For more info or a free stock analysis, please contact us at info@quickstockanalysis.com

analysis of citigroup inc - citigroup inc stock