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 ...
Don't assume your enemy doesn't understand this.
The 0 admn is creating economic conditions that will put the govt in control of the major industries. The stress test for the largest banks will call for more capital. No one in their right mind will put money into a bank the govt says is failing, so the govt will come in and put the capital in and take control of the bank. You can already see this on a smaller scale as banks are trying to pay back TARP funds and the govt keeps coming up with new requirements.
Now Chrysler and GM will in the end be owned by the UAW and govt. The UAW will want to sell off it's stake to pay retiree benefits, no one will want any of the stock so the govt will step in and buy it.
We are going to have a very hard time fixing this mess, but we will have to because our economy will collapse just as it has in every other totalitarian regime that nationalizes the economy.
Wow! Where did you steal that? We used to have one of those back in the day. It’s beautiful.
The List, ping
Let me know if you’d like on or off the ping list
Shareholders need to take them to court!!
Thank you for the heads up!
ping
Isn’t this outright thievery?
So... if I’m reading this right, the current 610 million shares will be reverse split to 6.1 million.
I don’t get it... shouldn’t a reverse stock split increase the share price?
Then, another 62 billion shares will become available at 0.01/share. So for the grand total of about 600 million dollars, Obama will essentially have 99.99% control of GM.
If that’s the case, I guess it won’t be long until we’re all forced to buy Chevy Yugo Hybrids...
I doubt that many even understand what has just happened.
The 0bama Regime just broke SEC rules.
They are above the law, just as they are above the law in terms of National Security.
No, most 0bamaniacs will see this as "sticking it to The Man", not knowing or caring that they have just destroyed, not only the livelihood of auto workers, but of the many associated companies and their workers.
And that extends to any company or business in America that is connected in any way with bailouts or TARP funds.
THAT'S why the 0bama Regime does not want any of the TARP money given back.
That Scared Rabbit look you see on Geitner's face is because, unlike 0bama, he knows exactly was is happening, and has visions of El Duce's end in his mind.
I thought the same thing.
Had to remind myself that they didn't exist in 1929.
My post to you should have included this quote form yours:
With our dumbed-down, ignorant, apathetic, immoral, entitlement-minded electorate, he just might be right. I guess it is worth a gamble to him.
look in the mirror...
Cliff Asness (a hedge fund manager) had this to say:
“Let’s be clear, it is the job and obligation of all investment managers, including hedge fund managers, to get their clients the most return they can. They are allowed to be charitable with their own money, and many are spectacularly so, but if they give away their clients’ money to share in the “sacrifice”, they are stealing.”
“The President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large. Find me a hedge fund that has been bailed out. Find me a hedge fund, even a failed one, that has asked for one. In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying. The TARP recipients had no choice but to go along.”
“The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. Why is he not calling on his party to “sacrifice” some campaign contributions, and votes, for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.”
The ACORN folks will silence this guy, and ruin his firm.
Goodbye GM, you almost became a great car company.
“Drive my Hyundai from Monday to Sunday”
My grandfather must be freaking out, he worked for GM and supposedly has shares of his own.
“contract law and property rights be DAMNED.”
Welcome to the new reality.
“a Great Leader to personalize it, put a face on it, and finish the task of making it fully accepted by Americans.”
A politically correct Great Leader. A white man would have been easy to defeat, but a black man was just the thing they needed. Now with Zero in charge he’s the perfect politically correct frontman for them.
All those dolts who voted for him to be ‘part of history’ are part of history indeed and I don’t think this is a great history.
Wow, no lube or anything. That’s harsh.
He will “sell” it as the “Right thing to do”....
Face facts folks — we have our own Chavez....
Except our bastard wasn't even eligible to run for president!
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