U.S. Treasury Department Confirms Planned Sale of 1.5 Billion Shares of Citigroup (NYSE:C) Common Stock

The U.S. Treasury Department today announced that it will make a pre-arranged sale of Citigroup (C) common stock. This is the third such sale Treasury has conducted since taking a 27% stake in Citigroup through the Troubled Asset Relief Program.

Morgan Stanley will act as Treasury’s sales agent and will have discretionary authority to sell 1.5 billion shares of Citigroup common stock under certain parameters.

The trading plan will end on Sept. 30 even if all shares have not been sold by that time because of the blackout period set by Citigroup in advance of the release of the New York banking giant’s financial results for the third quarter.

Treasury received 7.7 billion shares of Citigroup common stock last summer as part of the exchange offers conducted by Citigroup to strengthen its capital base. Treasury exchanged the $25 billion in preferred stock it received in connection with Citigroup’s participation in the Capital Purchase Program for common shares at a price of $3.25 per common share.

Treasury currently owns approximately 5.1 billion shares of Citigroup common stock and expects to continue selling its shares in the market in an orderly fashion. On July 1, Treasury announced the completion of its sale of a total of approximately 2.6 billion shares of Citigroup common stock across two trading plans and its receipt of approximately $10.5 billion in gross proceeds from the sale.

As part of the disposition program, Morgan Stanley agreed to provide opportunities for involvement by small broker-dealers, including minority-, women-, and veteran-owned broker-dealers. Morgan Stanley has entered into agreements with the following 12 broker-dealers: Cabrera Capital Markets, LLC; Great Pacific Securities, Inc.; Guzman & Company; Kaufman Bros., L.P.; Loop Capital Markets; M. Ramsey King Securities, Inc.; Mischler Financial Group; M.R. Beal & Company; Sturdivant & Co. Inc.; Valdés and Moreno, Inc.; The Williams Capital Group, L.P.; and Wm Smith & Co.

Morgan Stanley and its financial institutions group have advised the government on many of its bailout initiatives for some time now. The firm served as an adviser to the Federal Reserve Bank of New York for the American International Group’s recent sales of two major subsidiaries, for example.According to Treasury, the sale of shares can begin anytime after the official announcement on Friday.

There are nearly 29 billion Citigroup shares outstanding, according to FactSet Research.

On the heels of rising 3% to close at $4.09 on Thursday, shares of Citigroup were trading at $4.04 in early market action.