Imagine I owe you $1.135 billion. (Don’t worry. I’m good for it.) But instead of repaying you in cash, I pledge to hand over stock in an Internet company whose best days are behind it. Not a great idea, is it? But that’s exactly what Citigroup did, at least according to the Wall St Journal.
Japanese banking giant Softbank in 2004 borrowed $1.135 billion from Citigroup. Softbank was permitted to repay the loan in cash, or with a set number of shares of Yahoo, in which Softbank has been an investor since Yahoo’s early days.
Just one small problem. Yahoo’s stock price was as high as $39 back in 2004, valuing the 53 million (split adjusted) shares pledged by Softbank at more than $2 billion. Today, those shares are worth just $670 million..
Read more at http://blogs.wsj.com/deals/2011/08/26/did-citigroup-get-fleeced-on-yahoo-shares/
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