Cleary Gottlieb represented Citigroup Global Markets and Morgan Stanley & Co. Incorporated as underwriters in a $989 million offering by Citigroup Funding Inc. of 33.5 million Variable Rate Exchangeable Notes (SynDECSSM) due September 27, 2008. The SynDECS are mandatorily exchangeable into Class A common stock of Genworth Financial, Inc. (or their cash equivalent). At maturity, each SynDECS note will be exchanged into a total amount between approximately 5/6th of one share and one share of Genworth Class A common stock, depending on the closing price of Genworth Class A common stock at maturity. The SynDECS bear interest of 4.583%, plus or minus adjustments for changes in the dividend rate on the underlying Genworth Class A common stock. The payments due under the notes are fully and unconditionally guaranteed by Citigroup Inc.Cleary also acted as special tax counsel to the issuer in the transaction.
The SynDECS are the latest extension of the DECS equity-linked debt product. In connection with the SynDECS offering, GE Financial Assurance Holdings, Inc., a Genworth shareholder, sold 24.1 million shares of Genworth Class A common stock to Citigroup Global Markets. In a concurrent public offering, GE Financial Assurance Holdings offered 92 million shares of Genworth Class A common stock.