Skip to comments.GM details plans to wipe out current shareholders [securities fraud]
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 ...
What the HELL.
I don’t even recognize this country anymore.
They are dirtly, lowdown dogs.
The quintessential national socialist move.
I sent an email to my broker and that under no circumstances is he to buy any GM or Chrysler stocks or bonds.
Somehow I suspect that this kind of deal is a violation of existing Securities laws. But then laws are for the little people.
This whole corrupt, unconstitutional, criminal mess stinks to high heaven. Obama & Co should see prison time for this.
...and they are going to pay for your new GM car if you become unemployed. (Nevermind the idea that people whose job is at risk shouldn't be buying new cars.)
I buy trucks for my business.
Now I’ll strictly be a Ford customer...
Its basically a BK without the filing. The Obama Way. Interesting to see how they mix the reverse split with the DOW Average. No wonder they keep delaying the Stress Test results.
I just don’t understand how this is even legal. I’m just speechless. Obama’s audacity has literally taken my breath away.
This is not a notice of a meeting of stockholders and no stockholders meeting will be held to consider the matters described above. We are not seeking any consent, authorization or proxy from you, and no action by you is required.
What’s good for GM is good for America. and vice versa.
Makes me glad I have a used (and fully paid for) European car.
This is just the first daylight robbery of many IMO.
Obama and his criminal congress need to be jailed for this BS ! they are maddoff, enron, etc all rolled into one .
Our country is under attack by an illegitimate poser who is destroying our country as fast as he can before he's recognized for what he is and makes his peace with the Caterpillars.
That's about as rosy a forecast as I can come up with.
How is this legal?
Can’t current stockholders sue to stop this?
Tell me about it! $100, with low miles on it.
Mr. Buzzard had a pretty good look at it.
They did not call it the Audacity of Nope for nothing.
That article is like 100 percent BS.
They are talking of a 10:1 reverse split which will REDUCE the number of shares to 61 million from the current 610 million.. that would move the share price from $1.85 to $18.50.
Seems to me some Obama voting retired “friends” of ours said in November that they had stock or bonds in GM....gee...that’s too bad. (Haven’t heard from them in awhile....I think they maybe are trying to stay afloat....and they don’t like my emails about Obomba’s pursuits.)
Not good enough. This is outright robbery under color of law and principles of contract law and property rights be DAMNED.
You must have missed this part.
What model Benz is that? I would like something like that to drive to work and back.
It’s a 1984 M-B 300D turbo diesel.
I may give it a go.
Credit to Petronski-
This is NOT BS
“The Restructuring Transactions will cause very substantial dilution to existing holders of GM common stock. As of March 31, 2009, there were 610,505,273 shares of GM common stock outstanding. Assuming full participation in the Exchange Offers, the aggregate amount of GM common stock issued in connection with the Exchange Offers will be approximately 6.1 billion shares, which, based on the number of shares of GM common stock outstanding as of March 31, 2009, would represent approximately 10% of the pro forma outstanding GM common stock; the aggregate amount of GM common stock issued to the U.S. Treasury (or its designee) pursuant to the U.S. Treasury Debt Conversion and to the New VEBA pursuant to the VEBA modifications will be approximately 54.4 billion shares, which would represent approximately 89% of the pro forma outstanding GM common stock, with the final allocation between the U.S. Treasury (or its designee) and the New VEBA to be determined in the future (however, as a condition to closing the Exchange Offers, subject to the overall limit of approximately 89% of the pro forma outstanding GM common stock to be issued to the U.S. Treasury (or its designee) and the New VEBA in the aggregate, the U.S. Treasury (or its designee) will hold at least 50% of the pro forma outstanding GM common stock); and existing GM common stockholders would hold approximately 1% of the pro forma outstanding GM common stock. We determined the foregoing GM common stock allocations following discussions with the U.S. Treasury where the U.S. Treasury indicated that it would not be supportive of higher allocations to the holders of GM Public Debt or to the existing GM common stockholders.”
The Treasury (or it designee) gets 50% of ** 60.5 BILLION ** shares. Current common stock holders get par value. That is $0.01
Geez, I didn’t know so many people get hurt when a company is nationalized by its gov’t.
Bye, bye Mrs. American Pie. Gonna have to drive my Fiat to the levy now.
I’m going to PM you so I don’t hijack this thread.
Actually, judging by sales history, you’d more likely be driving your Camry to the levee. And it does rhyme.
NYSE rules require listed companies, such as GM, in general to obtain shareholder approval before issuing new shares that exceed 20% of their outstanding shares.
It is not clear to me how this plan is legal under the NYSE rule if they do this without putting it to a vote of existing shareholders.
I didn’t it was 60 MILLION not 60 BILLION the article is WRONG
I’ve been drivin’ my Ford to the levee for years. Sadly it didn’t rhyme.
Buh-bye GM! Your only possible buyers are Code Pink, DailyKos, and MoveOn.org.
You sold your soul to a frikin’ TELEPROMPTER! lol!
“Jaguar,” “Nissan,” “Honda” and “Toyota” don’t rhyme either. I took my Jeep to the levee but the parking brake didn’t hold and it almost rolled into the river.
Maybe you should've driven it to the fjord.
Really now? Can you please post the alterante sources that show that? Thanks in advance.
It's been a tough crowd tonight so I'll take it.
Ah..My levee days are over. I’m all Honda. No more breaks.
“The Nazis would have never dared this type of thing this early on in their reign.”
Shocking, isn’t it?