They need to pay the tarp first. Then they can convert but the US government will keep the shares, untill Citi can buy it back, so no need to pay big dividends, could be years before Citi buys back all the shares, shorts are hoping for the shares to be returned soon so they can buy and return the shares on margin.
I understand C has the option to convert government owned TARP Preferred shares into Mandatory Convertible Preferred.
The latter satisfies the regulatory requirements for capital. Such shares may be converted to Common shares as needed to use the capital (when requested by the bank or the regulators, or mandatory conversion at the end of 7 years).
I am guessing that such conversion to Common shares may take a while to happen, therefore their impact on share dilution should be minimal for a while.
I am also guessing that the rest of the Preferred shares (i.e., non-government owned Preferred) are those that will actually be converted sometime between June and Nov 9.
Anyone has any guesses as to when such conversion will occur based on SEC docs, press releases, etc.? Any input as to why the above guesses may not be correct?
I believe they said they are working to get all of this implemented soon. So I would expect it to be before November. I haven't have the time though the past week to really read up in detail on what all is going on so I could be wrong.