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US to sell 465.1m Citigroup warrants

Citigroup received $45 billion in taxpayer support late in 2008 in one of the largest bailouts undertaken by the government. Citigroup received $45 billion in taxpayer support late in 2008 in one of the largest bailouts undertaken by the government. (Justin Sullivan/ Getty Images)
Associated Press / January 25, 2011

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WASHINGTON — The government says it will sell 465.1 million warrants it holds from Citigroup Inc. in an auction today. It is the latest effort to recoup costs from the $700 billion financial bailout.

Sale of the warrants gives the holder the right to buy Citigroup common stock at a fixed price.

The warrant sales will add to the $12 billion profit that Treasury says the government has realized from its $45 billion bailout of Citigroup.

For 255 million warrants classified as “A warrants’’ the minimum bid price will be 60 cents. The second group of “B warrants’’ will have a minimum bid price of 15 cents.

By purchasing the warrants, buyers will have the right to buy an equal amount of shares at a fixed price. For the A warrants, the fixed purchase price is $10.61 and for the B warrants, the fixed purchase price is $17.85. The prices are significantly higher than where Citigroup stock has been trading. Over the past year, Citigroup shares have traded as high as $5.15. Shares yesterday slipped 3 cents to $4.86.

The government will announce the results of today’s warrant auction tomorrow.