Citigroup Reaches Aid Deal With Government

A deal has been made for a third rescue attempt in the past five months for struggling Citigroup.

By: Associated Press | WSAV-TV
Published: February 27, 2009

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A deal has been made for a third rescue attempt
in the past five months for struggling Citigroup.
The U.S. government will exchange up to $25 billion in emergency
bailout money for as much as a 36 percent equity stake.
The deal is contingent on private investors also agreeing to a
similar swap.
The conversion will help provide Citi the mix of capital needed
to withstand further weakening in the economy. The stock-conversion
option gives the government greater flexibility in dealing with
ailing banks. It also gives the government voting shares, and
therefore more say in a bank's operations.
Investors appeared disappointed in the deal and expected
dilution of their stake, sending shares plummeting 94 cents to
$1.56 in premarket trading.
Citi will also reshape its board of directors.