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Old 05-06-2009, 03:08 PM   #1
AVANTI R5
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Default GM Plans To Issue 60 BILLION Shares Of Stock

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DETROIT (Reuters) -- General Motors 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 UAWThe 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.
The automaker said it expected to draw another $2.6 billion from the U.S. Treasury before a June 1 deadline set by the Obama administration for it to reach agreements with all of its key stakeholders.

That borrowing would take GM's debt to the U.S. government to $18 billion, and the automaker said it expected to have to borrow a total of nearly $27 billion.

Stock down 43%
GM has asked its three major creditor groups to write off at least $43 billion in debt in exchange for ownership of a restructured company.

By contrast, the current market value of GM's current 610 million shares is about $1.7 billion.
The stock has lost about 43 percent of its value since the start of the year.

GM bondholders, who are owed $27 billion, have also been offered new stock in exchange for writing off debt in a bond exchange the automaker launched last week.

The automaker is targeting a debt-reduction of at least $24 billion of its bond debt under the plan and has warned that it could be forced into bankruptcy if that cannot be achieved.
Representatives of GM bondholders, who would be given a 10-percent stake in the new company under the automaker's restructuring, have said they are being offered an unfairly low payout. They have asked instead for a majority stake in the restructured company.

But GM has asked the U.S. autos task force to accept a majority stake in a new GM in exchange for at least half of the government debt that the automaker has run up over the past four months.

CEO Fritz Henderson said on Tuesday that the U.S. Treasury, which oversees the task force, was continuing to evaluate the company's restructuring plan and its progress.
"The Treasury will continue their evaluation through the month, which is fine. But we're not waiting, we're implementing. The bond exchange needed to be launched when we launched it," Henderson said. "Now we'll have to see."

In its filing, GM said it was in "ongoing discussions" with the U.S. Treasury on its proposal to swap government debt for equity in the largest U.S. automaker.

Finally, GM is negotiating with the UAW and is seeking to get the union to take GM stock in exchange for $10 billion owed to a trust fund for retiree healthcare.

Those talks were set to resume this week in Detroit, Henderson said.

GM said in its SEC filing that its three-pronged effort to slash debt could take its total authorized share issuance -- including new and existing shares -- to 62 billion shares.
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Old 05-06-2009, 03:56 PM   #2
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I don't think there will be a market for all those shares.
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Old 05-06-2009, 04:08 PM   #3
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I'm lining up for a billi or two.
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Old 05-06-2009, 04:09 PM   #4
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^^^^^ Per the bailout agreement, we already own half of 'em.
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Old 05-06-2009, 04:19 PM   #5
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I'd buy a bunch at 1 penny - some even at 10 cents. But I wouldn't hold it long - first spike and out.
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Old 05-06-2009, 04:25 PM   #6
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I don't think there will be a market for all those shares.
hence the 100 -> 1 reverse split. even then it will still be worthless.


meanwhile ford is up ~600% from the low
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Old 05-06-2009, 04:30 PM   #7
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I'd buy a bunch at 1 penny - some even at 10 cents. But I wouldn't hold it long - first spike and out.
You must have missed the part about the reverse split.
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Old 05-06-2009, 04:48 PM   #8
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You must have missed the part about the reverse split.
Yep - nice...
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Old 05-06-2009, 05:23 PM   #9
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hence the 100 -> 1 reverse split. even then it will still be worthless.
I still think it will be under subscribed. The move wreaks of desperation.
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Old 05-06-2009, 05:45 PM   #10
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I still don't think the 100-1 split will make much of a difference. 60 billion shares will ensure that the stock price will hardly fluctuate up or down... ever. It will just sit there.
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Old 05-06-2009, 05:47 PM   #11
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I still think it will be under subscribed. The move wreaks of desperation.

Not to sound like and ass, but the are desperate. They have been for a while now. You say it like no one is actually sure GM is on very hard time.
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Old 05-06-2009, 07:28 PM   #12
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^^^
Of course they're desperate, and everyone knows it. Which is why there won't be enough demand for GM stock at any price. They need to go into receivership and reorganize.
Instead of giving a "bailout" to GM, the government would have been WAY better off underwriting a DIP (Debtor In Possession) loan for them.
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Old 05-07-2009, 03:49 PM   #13
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Time to stop loosing our money GM burns cash - keeps trudging along. They should have killed Pontiac over a year ago. Should have eliminated all double / Tripple badging of the same fliping car years ago. I swear if I hear they burned another billion or so in 3-4 months the tax payers should be given all of whats left of the assessets. Any company that burns through the money GM has is in Auto Terms a giant POS Lemon and needs to get scrapped pronto.
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Old 05-07-2009, 04:58 PM   #14
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dump the star trek dashboard and criss crossing Mid 90's Pontiac minivan style wipers and the current civic is decent looking in my book. This looks like it'll be even better, hoping they get rid of those two aspects though!
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Old 05-07-2009, 05:01 PM   #15
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dump the star trek dashboard and criss crossing Mid 90's Pontiac minivan style wipers and the current civic is decent looking in my book. This looks like it'll be even better, hoping they get rid of those two aspects though!
umm....
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Old 05-08-2009, 11:44 AM   #16
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dump the star trek dashboard and criss crossing Mid 90's Pontiac minivan style wipers and the current civic is decent looking in my book. This looks like it'll be even better, hoping they get rid of those two aspects though!


...a brilliant GM executive understudy.
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Old 05-08-2009, 08:27 PM   #17
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I may buy one share just for the hell of it. The best part is, if GM makes lets say a 42 million dollar profit, if you own 100 shares, you will get a $.07 dividend.
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Old 05-09-2009, 04:49 AM   #18
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I may buy one share just for the hell of it. The best part is, if GM makes lets say a 42 million dollar profit, if you own 100 shares, you will get a $.07 dividend.
And how much do you pay for a trade?
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Old 05-09-2009, 10:40 AM   #19
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...a brilliant GM executive understudy.
sorry had multiple windows open and replied to the wrong thread, that was meant for the thread about the new 2011 civic concept

If a mod could move my original reply to that thread, that'd be great.
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Old 05-10-2009, 10:40 PM   #20
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Well, if you have $600 burning a hole in your pocket, you can either buy a new PS3 ultimate package or new GM stock.
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Old 05-11-2009, 01:30 PM   #21
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I may buy one share just for the hell of it. The best part is, if GM makes lets say a 42 million dollar profit, if you own 100 shares, you will get a $.07 dividend.

No. No you wouldn't. That is not the way it works.
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