Posted on 05/05/2009 9:06:48 PM PDT by 2ndDivisionVet
General Motors Corp on Tuesday detailed plans to all but wipe out the holdings of remaining shareholders by issuing up to 60 billion new shares in a bid to pay off debt to the U.S. government, bondholders and the United Auto Workers union.
The unusual plan, which was detailed in a filing with U.S. securities regulators, would only need the approval of the U.S. Treasury to proceed since the U.S. government would be the majority shareholder of a new GM, the company said.
The flood of new stock issuance that could be unleashed has been widely expected by analysts who have long warned that GM's shares could be worthless whether the company restructures out of court or in bankruptcy.
The debt-for-equity exchanges detailed in the filing with the Securities and Exchange Commission would leave GM's stock investors with just 1 percent of the equity in a restructured automaker, ending a long run when the Dow component was seen as a bellwether for the strength of the broader U.S. economy.
GM shares closed on Tuesday at $1.85 on the New York Stock Exchange. The stock would be worth just over 1 cent if the first phase of GM's restructuring moves forward as described.
Once GM has issued new shares to pay off its debt to the U.S. government, bondholders and its major union, it said it would then undertake a 1-for-100 reverse stock split.
Such a move would take the nominal value of the stock back to near where it had been before the flood of new shares. But in the process, GM's existing shareholders would see their stake in the 100-year-old automaker all but wiped out.
(Excerpt) Read more at globeinvestor.com ...
#1, because it's go along to get along in Washington, D.C. We saw that with Bush not going after Clinton and his people for their illegalities and treason.
#2, because if we go after him and his *people* then it'll be tit for tat after that. What good people would want to run knowing that they'll end up being prosecuted even on made up charges?
So drive your Honda to the pond, uh.
This is very true. In addition, people seem to like him personally (I think he's creepy and ominous) and he is very good at saying what they want to hear. Cardinal George of Chicago had a meeting with him a couple of weeks ago to discuss abortion, and Cdl George came out of the meeting saying that it was sort of like Alice in Wonderland, because Obama kept insisting that he and Cdl George believed the same thing about abortion. Cdl George said that he had to tell Obama firmly several times that there was nothing in common between their views, but that Obama just blandly went on as if he had said nothing. In other words, he is doing much of this by simply saying anything that he thinks people want to hear - while doing anything that he wants to do or is being told to do by whoever is behind him. If we had a decent press, he would be held accountable for this. But as it is, he can say one thing, do the opposite, and it causes absolutely no waves.
Furthermore, when there is any opposition (such as on the part of Lauria), he shows his fangs and the fangs of the entire US government apparatus, and people are afraid. But he usually does it privately and then just lies about it afterwards, so most people are unaware of it. In addition, they'd simply rather not know.
This guy was sold to them by the press as some sort of savior and hero, and they're not going to let reality interfere.
Communism has been gradually introduced into the collective mind of this country by more than 40 years of terrible state education, but it took a Great Leader to personalize it, put a face on it, and finish the task of making it fully accepted by Americans.
GM down to 1.42 in pre-market trading...down 22% as I write this.
Who is going to buy the new stock?
Welcome to the United Socialists States of America.
http://edgar.sec.gov/Archives/edgar/data/40730/000119312509100053/dpre14c.htm
Shareholders need to take strong legal action....
shouldn’t the headline be Govt instead of GM now
What are the implications for the stock market as a whole? for us non-financial types....
Does this guarantee a stock market collapse and depression?
I saw a quote where obama says he thinks that the Constitution is *fundamentally flawed.
No doubt, he's referring to pesky details like citizenship requirements and term limits for the presidency.
With nowhere to put their money, they will either keep it int he banks (where the government will be able to monitor THEIR PRIVATE PROPERTY more easily and will be able to make withdraws from those accounts, thus CONFISCATING PRIVATE PROPERTY) or the individual citizen will have to invest THEIR PRIVATE PROPERTY with the federal government.
Either way, this is a confiscation of private property intended to destroy venture capital, the lifeblood of publicly owned companies and the shot-of-life for many startup companies.
I was a Ford buyer for my first three cars, then switched do Dodge. Never owmned a GM car, but I’ll be going back to Ford.
Anyone who trusts these fools in the White House is an idiot.
No, they devised a strategy to delay investigation and prosecution until it would most aid them, when they could blame the crime on too little regulation.
by issuing up to 60 billion new shares
So their strategy for corporate “solvency” is the same as for national monetary “solvency,” simply print a lot of new paper and push it out.
The result, of course, will be the same. It will devalue the current value of each piece of “paper” already in existence, in this case, the stock.
If something like FairTax was our national taxation system right now the "offshored" money estimated between US$12 and US$17 TRILLION will be mostly back in the USA; that will allow GM to easily recapitalize itself and the company's financial crisis will be a distant memory.
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