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 ...
Gee, where are all the securities class action lawyers when you need them? For once, they can jump on a non-frivolous action and they're no where to be found.
The standard plan of tyrants: (1) nationalize the banks (2) nationalize the auto industry if your nation has one (3) round up your political enemies and eliminate them (4) seize control of the food production.
I recall a thread about a bill in the HOR to make it a crime to have a garden or farm without being a fed designated gardener.
IT is for this very reason that my plans of buying one of the new Camaros has now been changed to looking into upgrading my 07 Mustang to a 2010 Mustang GT.
I stand corrected: http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=6304460&format=PDF
Current outstanding shares is 610 million @ $1.84
Yikes! So they will dilute the shares 100:1 and then execute the reverse split effectively killing the current share holders.
Same thing — the national socialists were fascists.
GM can’t crash & burn fast enough....
Law? What's a law? Zero makes his own 'law', silly boy.
With a flick of the wrist, Obama transfers the wealth of stockholders to the government. It's breathtakingly sinister. Is it going to far to say that if they can do this to GM, they can do it to any (and every?) corporation in America?. All they have to do is dream up the pretext.
I swear, it doesn't appear to me they're winging it. This has all been carefully choreographed in advance, probably somewhere in the basement of the Kremlin years ago. Every day it's another calculated body shot. I don't know how much more we can take.
When it really starts hitting obama voters and the MSM in the pocketbook, they'll either speak out or be taken over.
Hope the (current) shareholders stop this cold. Otherwise, a danger precedence will be set for us all.
Hope the (current) shareholders stop this cold. Otherwise, a dangerous precedence will be set for us all.
what makes me just as mad is where is the GOP making a show of this, why are they not hitting the airwaves, why are they not hitting the live cameras when bozo speaks like the Dems did to Bush.
The GOP instead of doing their so called listening tour which is embarrassing and just stupid they should be on the TV making a massive show about all of this and pointing out how this Govt is running away from the American way to a more Chavez way
I’ve called Mica and other reps in my area and while Mica is great the others just say what they think I should hear and never do anything
Glenn Beck has stated some amazing quotes by folks involved in the negotiations, Obama threating, acting almost godlike and these were from folks who voted for him, some called him frightening and a madman, will do anything to to justify the ends ...
Frankly, it means that the government, as long as it can find a thread of a reason, can do this to any other public American company.
As for the private companies, it will simply regulate and tax the hell out of them.
Not at all.
That is why the early Fabian-style Socialists only wanted the government to own four industries: energy, food, transportation, and medicine.
Their goal was to take over each slowly and to position it as: “The public sector doesn't need to run these industries and/or they are too important to risk being ruined or monopolized by greedy people. So, we'll take over ‘JUST THESE FOUR’ industries.”
What we know, now, however, is that if you control these four, you control every business and the individual liberty of every citizen in your country.
We learned when oil hit $120 a barrel that oil is the lifeblood of our economy. He who controls the flow of oil or its cost, controls not just business, but the economy.
And, you're right, this has all been orchestrated. While we were busy denouncing or defending Bush for 8 years, they were planning out how they would nationalize key industries (mostly union-backed) in order to socialize the country.
Stock up on food and water and the precious metals (gold, silver, and lead). Have a bug-out plan or prepare to stand in the government-handout line.
Good-Bye 5th Amendment.
I do believe you are correct.
Let me get this straight:
1. GM goes into debt by caving in to the unions and making poor cars for a few decades.
2. On the verge of bankruptcy, they accept money (borrow) from the Feds.
3. They also sell bonds, which is debt, many of which are purchased by the UAW.
4. Stockholders are NOT lenders - they are investors who own part of the company, and hence, they own part of the debt, too.
5. GM doesn’t have the money to repay its creditors, so it offers them an ownership position in lieu of going bankrupt.
6. To raise monet to vuy out private bondholders, it issues stock that renders the stock of the existing INVESTORS (NOT DEBTORS) virtually worthless.
SUMMARY:
Old stockholders are pretty much wiped out - the company they owned part of by virtue of their buying shares is ceasing to exist.
The new “owners” are the creditors that have been given partial ownership in lieu of the money they are owed.
Two of the principal new owners will be the government and the UAW.
At the bottom of it all, it is the fault of the company, GM, not the government.
CONCLUSION
Even though the gov’t and UAW are legitimate creditors, the whole thing stinks and I will never buy one of their products as long as the feds are part owners.
Not many people screaming about this. This country is screwed up.
That was Chrysler debacle right? Of did the same thing happen at GM too?
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