Earlier this year, the U.S. agreed to convert $25 billion of the preferred shares it bought from Citigroup into common stock. The government also converted $20 billion of Citi preferred stock into trust preferred securities, which the bank plans to repay with the proceeds of Wednesday's offerings.

Citigroup also is ending an agreement with the government that guaranteed a roughly $250 billion portfolio of assets against excessive losses.

The bank sold $17 billion of common shares and another $3.5 billion of bonds that automatically convert into shares in three years.

The bank sold convertible notes that pay a coupon of 7.5 percent a year, and automatically convert to shares at a 25 percent premium to the pricing level in three years.

The bank said on Monday it also plans to issue $1.7 billion of shares to employees, and may sell another $3 billion of trust preferred securities in the first quarter.

Citi's stock closed at $3.45 on Wednesday before the offering was priced.

The share sale price is less than the $3.25 price at which the government bought them earlier this year as part of an emergency rescue of the No. 3 U.S. bank, shrinking the paper value of the government's 7.7 billion shares to $24.2 billion.

priced at a much lower-than-expected $3.15 a share.

========================================================

The trade is now showing 3.19.....

What I get from it all....the US Gov. is going to get screwed on the common and should have remained in a preferred position collecting the dividend and sell when appropriate.

The gov was going to sell their common position into the CITI sale(dilution) and figured there would be demand....oops....

Would Buffet do as the gov does?.....lol

doni