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 ...
Even worse, is that many have that money in their corporate bonds. Especially those who wanted to go the "low risk", fixed income, way. However those funds are FDIC guarnateed, meaning the government will bail them out too, but given The One's penchant for breaking contracts as well as the law, it will probably be for pennies on the dollar. Or The One will institute "means testing" for getting one's retirement money out of those accounts.
Yep ....saw today the Fidelity Investments is a major backer of Bwarny Fwank......... dropping em this week and telling em why.
You are absolutely right. I thought of that after I posted. I lived in Guantanamo Bay as a kiddo in the ‘60s and the Cubans on base told us young’uns about how the Castro regime confiscated the weapons. They also shot the doors off my friends’ houses so they couldn’t lock their doors.
Our best hope is that people like your daughter either become informed to the dangers of complete government control or wake up from their apathetic comas (not calling your daughter apathetic.)
More power to her. I hope she keeps writing those letters to Obama and I hope she really wakes up to the cost and value of freedom. Freedom costs. You don’t get to have someone give you a stress-free life with all the trimmings provided. You have to strive and struggle and do for yourself so you can receive the fruits of reward from that work.
Your daughter is waking up. I’m thrilled to hear that. She and others like her, are out hope.
Incrementalism worked better than the communists ever dreamed. They have gotten greedy and are trying to swallow us whole in one bite. They run a serious risk of choking.
I had thought Hillary Clinton was the biggest danger we face. Obama makes her look like an amateur. He is completely audacious. I’m praying for a backlash as he continues to over-reach. We are near a tipping point where the body of ignorant electorate on the take is at or in excess of those who are paying for it. We are near or at that point where they will “vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.”
It seems that the Democrats have collectively decided we are beyond this point and they can move from incremental power consolidation to blatant power grabs, because they feel that the majority are locked into voting themselves largesse from the public treasury, ie - re-electing all democrats. With the flood of immigrants to this nation, they may be right. George W Bush, by throwing the borders wide open and continuing Clinton’s immigrant flood, guaranteed a huge imbalance between registered Democrat and Republican voters. We can’t change that now.
All I can hope and pray is that a very loud minority becomes so inflamed by the blatant power grabs by the Obama Administration, that a severe backlash destroys all in-roads by the Socialists for the past few decades.
Bill Clinton who illustrated brilliantly how easy it is to be “above the law” as long as nobody opposes you, like replacing all 93 US attorneys as his first act as president, and without a squeak from our Republican Gentleman’s club. We need street fighters. The Democrats fight dirty. I wish the Republicans would learn an eye for an eye, and worse. The Republicans need a conservative Patton who will simple shred the Democrats. Not a single one of them has a spine. Sad.
What is going on here? This is crazy!!
Did they mention why, if they were armed, they didn't shoot the bastards?
We had Tom DeLay, but he was taken down by the Republicans own rules: that a Republican leader must step down if he is indicted.
So that DA in Texas found a Grand Jury that would indict DeLay, and he has been waiting for a trial ever since.
George Bush was just too decent a guy.
Dick Cheney has it in him to be a street fighter, but I think President Bush kept him on a leash while he was in office.
There was that incident in the Senate where he told someone to "eff" off; that was an indicator of his spine.
It might seem like a good deal, but once it's stopped where we can inspect it, the 1st thing that comes to light is that it parks crooked.
Ah...a new form/mechanism of taxation and redistribution of wealth.
Steal from the “greedy” investors that financed industry technology development and give it to the bureaucrats and UAW union.
Nice.
I hope nobody gives it to them. I would love to see BofA flushed down the crapper.
obummer is a traitor.
SIAP but GM is now ran by the Mafia and will behave like it.
What about this plan is not stealing from the stockholders? Why should the stockholders lose almost all their money?
I sent an email to my broker and that under no circumstances is he to buy any GM or Chrysler stocks or bonds.
So, GM is now a penny stock.
Can’t these stockholders and bond-holders sue GM management???????????????????????????????????
And how on earth can the government REFUSE to accept TARP loan payoff checks from banks that want to pay it back??? Doesn’t LAW mean anything???
Whycan’t the banks just say “you’ve got 60 days to cash the check...if you refuse to accept legal tender, we will consider our obligations to you fulfilled.”
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