Nov 24 (Reuters) - Citigroup (C.N) will pay the U.S. state of Hawaii as much as $1.1 billion to settle a dispute over the state’s purchase of auction rate securities that resulted in losses, Hawaii’s attorney general said.
Citi must pay as much as $869 million to buy some or all the remaining securities owned by Hawaii and cover losses for $200 million worth of securities that the state had liquidated in 2008, under the deal, which was announced on Tuesday.
In June 2015, the state will have the option to require Citi to purchase some or all the remaning auction rate securities.
The state has also released potential claims against Citi in connection with its investments in auction rate securities.
Auction rate debt has rates that reset in periodic auctions. The auction-rate market froze early in 2008 in the wake of a credit crunch that destroyed the top ratings of some insurance companies that insured much of the debt.
Citi could not immediately be reached for comment by Reuters. (Reporting by Thyagaraju Adinarayan in Bangalore; Editing by Derek Caney)