As I own Citigroup (C) equity and preferred, I saw an interesting item come up on my alerts today. Citi filed an 8-k announcing an exchange and consent offer for $392 million of CitiFinancial Credit (formerly Commercial Credit Corp) debt.
Essentially, this is an exchange of Citi Holdings Co ("Bad Bank") into Citigroup notes. It would appear to me that Citigroup is preparing to shed assets of Citi Holdings and the buyer is not going to assume the debt associated with the assets.
The exchange and consent memorandum is expected out starting today - I haven't found it on EDGAR, but if anyone wants to forward it, that would be great.
From the 8-k:
The purpose of the Exchange Offer and Solicitations is to provide Citi Holdings greater flexibility with respect to the business and assets of CitiFinancial Credit Company.
The exchange details (click to enlarge image):
Eligible Holders have the opportunity to either (i) exchange any and all of their outstanding Old Notes for Citi’s intermediate term benchmark notes (the “New Citigroup Notes”), thereby delivering consents, or (ii) deliver consents for the Consent Payment without tendering their Old Notes, upon the terms and subject to the conditions set forth in the Offering Memorandum and Letter of Transmittal. Eligible Holders who deliver their Old Notes in exchange for New Citigroup Notes in the Exchange Offer will not be eligible to receive the Consent Payment as the Early Exchange Consideration will be consideration for such Eligible Holder’s consent (provided that the Eligible Holder tenders the Old Notes prior to or on the Early Tender Date (as defined below) and does not withdraw them prior to the revocation deadline (as described in the Offering Memorandum).
Disclosure: I am long C.