Attention GM (GM) Shareholders! You Have Exactly 60 Days To Sell At Whatever Price You Can
Up)
Despite news that the Bush administration basically outlined that shares of General Motors (NYSE: GM) will become worthless, the stock is actually up today - quite a feat.
In the Treasury's term-sheet for loans to the company, they have indicated that GM will have to reduce their public indebtedness by not less than two-thirds through conversion of existing public debt into equity or debt (a "Bond Exchange") and other appropriate means. With $36 billion in long-term debt (plus billions in other liabilities) and a current market cap of just $2.5 billion, this means that current GM common share holders have to be wiped-out. I would be surprised if GM trades above $1 after all the dilution.
I guess shareholders are hoping for better terms from the Obama administration, but Obama will likely be worker-friendly not shareholder-friendly.
In the Treasury's term-sheet for loans to the company, they have indicated that GM will have to reduce their public indebtedness by not less than two-thirds through conversion of existing public debt into equity or debt (a "Bond Exchange") and other appropriate means. With $36 billion in long-term debt (plus billions in other liabilities) and a current market cap of just $2.5 billion, this means that current GM common share holders have to be wiped-out. I would be surprised if GM trades above $1 after all the dilution.
I guess shareholders are hoping for better terms from the Obama administration, but Obama will likely be worker-friendly not shareholder-friendly.
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