Citigroup Seeks Reverse Stock Split
Us banking corporation Citigroup, having sucked up $45 billion in bailout money, is considering a reverse stock split, which would give the US government a 36% stake in the financial giant.
A reverse stock split is a consolidation of existing shares, with the intent of creating more value per unit. This move can be initiated by a company's board of directors without shareholder approval.
Citigroup, which took $45 billion from the government's Troubled Asset Relief Program, also defended spending $10 million to renovate executive offices at its Park Avenue headquarters, saying the project will save more than it costs.
The reverse split could be for 1-for-2, 1-for-5, 1-for-10,
1-for-15, 1-for-20 or 1-for-30, the company said in an SEC
Companies often split their stock when they believe the price of their stock is too low to attract investors to buy their stock. Some reverse stock splits cause small shareholders to be "cashed out" so that they no longer own the company’s shares.