Shares of GM Deflating as Debt Swap, 1-for-100 Reverse Stock Split Proposed
Shares of General Motors (NYSE: GM) are getting clobbered this morning amid reports last night that the automaker is currently working on a deal with the U.S. Treasury to swap more than half of GM's government debt for equity. The stock most recently traded at $1.52, down nearly 18% from last night's closing price.
GM disclosed yesterday in an SEC filing that it may offer 1 share of new stock for every 100 currently held by shareholders in a reverse stock split. Such a deal is contingent on an agreement between GM, its bondholders and the UAW, and would make the US government an at least 50% owner of the automaker.
If a deal is not inked by the Obama administrations June 1 deadline, GM will likely be forced into bankruptcy.
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