Citibank in Restructuring of Sallie Mae Equity Forward Contracts

December 28, 2007

Cleary Gottlieb represented Citibank, N.A. in the restructuring of equity forward contracts held by SLM Corporation (commonly known as Sallie Mae). Sallie Mae’s forward contracts with multiple banks obligated it to purchase its own shares in the future for approximately $1.95 billion, though the shares had since declined in value to a little over $900 million. The forward contracts also had share price triggers that would have accelerated Sallie Mae’s obligations if its shares descended below a certain price. The acquisition of multiple forward contracts by Citibank allowed Sallie Mae to delay the repurchase of its common stock until February 2008, providing flexibility for Sallie Mae to raise capital.