Citigroup in ELKS® Offering Linked to Echostar

April 29, 2005

Cleary Gottlieb represented Citigroup Global Markets Inc. as placement agent in the offering by Citigroup Global Markets Holdings Inc. of $11.3 million in principal amount of 2.87% ELKS® Mandatorily Exchangeable into the Class A Common Stock of Echostar Communications Corporations, due 2006. 

The ELKS®, issued under a medium-term note program, are unsecured senior debt securities that offer investors the possibility of receiving a greater payment at maturity than they would otherwise receive on a Citigroup Global Markets Holdings bond of comparable maturity.  Investors receive at maturity a number of shares of Echostar Communications Class A common stock based on a specified exchange ratio.  The ratio is subject to a cap price that limits investors’ share of any appreciation in the value of Echostar Communications Class A common stock to approximately 25% of the original price of the common stock.

Medium-term note programs allow issuers to “take down” securities off their existing shelf registration statements with minimal transaction costs.  These reduced costs facilitate offerings of smaller amounts of securities than would otherwise occur, and they assist issuers in managing their liabilities and cash more precisely.  Often, an entire issue is sold to a particular end purchaser (usually a pension fund, mutual fund or other institutional investor).  In many cases the end purchaser actually initiates the transaction, specifying the characteristics of the security it wants to buy and approaching the issuer (or the investment bank acting as agent for the program) to request issuance of a security meeting those characteristics.