Citigroup Funding offers $900 million notes exchangeable for Genworth, talked at 5.35%-5.85%, up 20%

Rebecca Melvin

Princeton, N.J., Sept. 14 - Citigroup Funding Inc. is expected to price roughly $900 million of three-year securities that are exchangeable into shares of Genworth Financial Inc., with price talk for a 5.35% to 5.85% coupon and an initial conversion premium of 20%, a Citigroup source said.

The deal, in the SynDECs structure, is expected to price Sept. 21 after the close.

Citigroup Global Markets is the bookrunner for the deal, which is part of move by General Electric Co. to reduce its ownership in Genworth, an insurance holding company.

In addition to 21 million Genworth shares that GE will sell to Citigroup, GE also plans to sell 60 million shares of Genworth in a public offering.

Citigroup plans to price 29 million of the exchangeable securities plus a 15% greenshoe.

If the transactions are completed as planned with all the over-allotments, GE will own 32% of Genworth's common stock.

Richmond, Va.-based Genworth will not receive any proceeds from either transaction.

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