Posted on 05/06/2009 1:16:04 PM PDT by mojito
To the Stockholders of General Motors Corporation:
General Motors Corporation (“we,” “us,” “our” or “GM”) is undertaking a restructuring as part of a plan to achieve and sustain long-term viability. A key element of this plan involves us pursuing transactions in which we would issue GM common stock in satisfaction of certain of our outstanding debt obligations and retiree healthcare obligations. In connection with the foregoing, we are currently in discussions with the U.S. Department of the Treasury (the “U.S. Treasury”) regarding the terms of a potential restructuring of our debt obligations owed to the U.S. Treasury, pursuant to which the U.S. Treasury would exchange at least 50% of such debt for shares of GM common stock (the “U.S. Treasury Debt Conversion”). We have not reached an agreement with respect to a U.S. Treasury Debt Conversion. The actual terms of any U.S. Treasury Debt Conversion are subject to ongoing discussions between GM and the U.S. Treasury, and there is no assurance that any agreement with respect to a U.S. Treasury Debt Conversion or other aspects of the proposed restructuring described in the accompanying Information Statement will be reached on the terms described in the accompanying Information Statement or at all.
If the U.S. Treasury Debt Conversion is consummated, the U.S. Treasury (or its designee) would own at least 50% of the aggregate amount of pro forma outstanding GM common stock. This notice and the accompanying Information Statement are being furnished to our stockholders with respect to action that may be taken in connection with this restructuring by the U.S. Treasury (or its designee), as holder of a majority of the issued and outstanding shares of GM common stock as of the record date described in the accompanying Information Statement, approving, by written consent (in lieu of a meeting of our stockholders), amendments to our restated certificate of incorporation that would:
Increase the number of authorized shares of GM common stock to 62 billion shares;
Reduce the par value of GM common stock from $1 2/3 per share to $0.01 per share; and
Effect a 1-for-100 reverse stock split of GM common stock, whereby each 100 shares of GM common stock registered in the name of a stockholder at the effective time of the reverse stock split will be converted into one share of GM common stock.
If the restructuring as currently contemplated occurs, there will be very substantial dilution to existing holders of GM common stock. After the restructuring, as currently contemplated (assuming full participation in the exchange offers described in the accompanying Information Statement), existing holders of GM common stock would hold approximately 1% of the outstanding GM common stock.
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. The accompanying Information Statement is being provided to you for your information to comply with the requirements of the Securities Exchange Act of 1934, as amended.
The amendments of our restated certificate of incorporation described above will not be effected until the settlement date of the exchange offers and unless we are able to consummate the U.S. Treasury Debt Conversion.
Sincerely,
Robert S. Osborne, Secretary
Frederick A Henderson, Chief Executive Officer
High crimes and misdemeanors!
GM has had very little to do with Capitalism for some time now.
Read more closely. GM is going to take a hundred of your current shares and convert them into one share.
Hence, it’s not one share that’s going to be worth a penny - it’s 100 shares.
Can zero actually get away with this? Is anyone going to fight this in the legal system?
Yep.
According to my estimate, Chrysler will also become a foreign owned company like Toyota etc. That get’s them out of US taxes on all their non-US operations.
And the federal government stole 50% of the stock.
Everything bad that has come out of the Chrysler and GM bailouts has been result of the 2 formerly private companies taking on of government money.
And the UAW gets the other 50%.
With shares trading below $2, I think they already have!
Read Atas Shurgged.
Obama is like the looter politicians in the book.
It is for the “social good” = “for my personal power”
Since this announcement was made public just as the markets closed, GM has dropped in overnight trading from $1.85 to $1.66, when I last checked a few minutes ago.
Expect panic selling tomorrow.
It’s only the par value that is changing ... not the market value.
The par value is a resetting of the value from when the stock first came public (way back when ...). Doesnt matter what the par value is.
We care about the market value.
Although I predict that someday (no prediction on how long) the MARKET value of GM common stock will trade at LESS than it’s new par value.
this is not even a bankruptcy where a judge can be challenged or rules of valuation can be followed.
How many americans are share and bond holders of GM.
It is like Obama is FORCING americans to only buy a Ford.
Nah this came out last night. The $1.85 to $1.66 was today’s stock market action.
"We are not seeking any consent, authorization or proxy from you, and no action by you is required. "
And the real action begins after the reverse split.
That just means people are ASLEEP at the switch.
Yep. I wrote last night that it would be amazing to see GM go from DJIA component to pink-sheet penny-stock overnight.
I agree. Check the link a couple of posts above — the guy is fairly frantic as a rule but he figured it would open at 2c today.
Why am I supposed to be upset that owners of common stock in a bankrupt company are losing their investments? Now secured bond holders going to the back of the line, is a different story, but common stock holders are always last in a bankruptcy.
Many have bought at or around $2. Their stock will be worth a very small fraction of $2, so they will be hit hard by this.
Because it’s happening as a direct result of a government takeover rather than good old fashioned bankruptcy. It’s the principle of the thing.
My interest is what steps will be taken to advantage Government/Gettelfinger Motors cars and disadvantage their many competitors.
A guy on CNBC said it will take the “mother of all incentives” to move the inventory from Chap 11 car companies.
If this was just a regular bankruptcy, that would be fine - you make your wager, and sometimes you lose.
But what is happening here is that GM is ruining their current shareholders equity so that they can issue a massive new equity stake to the Treasury and the UAW pension fund.
They are stealing their shareholders value in the company in order so that they can create a new group of shareholders, who just happen to be the 0 administration and the UAW.
At $1.85 per share the equity is gone. It wasn't stolen, it was pissed away by losy management. FedGov and UAW are just opportunistically grabbing controllof the formerly largest automaker in the world. They are buying junk and the free market values that junk at $1.85 per share today. So what do they get? An obsolete auto manufacturer with crappy products built by UAW goons and controlled by the FedGov! Who will buy these new shares when they trade???
Fortunately for me I bought my last GM car last year. But I guess bama is goign to use cap and trade or is it cheat and steal to make gas for my 06 GMC pickup so expensive and a carbon tax on top of it so I won’t be able to afford to use it. It’ll still look good in my driveway.
You will, or rather you'll own them, along with the rest of us suckers...ehr...taxpayers.
However, what you own won't be an automaker, even a defunct one with crappy product.
What you'll own is a government subsidized pension fund doleing out benefits to over a million people that just happens to operate a small auto-making subsidiary. Making a crappy product that no one in their right mind will buy.
That'll be hard with no customers left. I'm a 3rd generator GM buyer who won't likely buy another one.
No Kidding! After hour trading is still open, and the stock is at $1.64!! I tried shorting, but ETrade couldn't borrow any shares. I just looked back at my streamer, and there haven't been any shares traded in the last 10 minutes or so, very probable that it was halted - oops, just checked, still trading, currently 78,387,612 for the day, last price 1.63...78,390,112....1.64
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