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GM plans 1-for-100 reverse stock split
May 5, 7:52 PM (ET)
By KIMBERLY S. JOHNSON and TOM KRISHER
DETROIT (AP) - General Motors Corp. (GM) (GM) notified shareholders Tuesday it is planning a reverse stock split that would give them one share of new stock for every 100 shares they currently own.
The automaker said in a filing with the Securities and Exchange Commission that the deal would be part of an agreement with the Treasury Department in which the government would assume at least half of GM's debt in exchange for company shares. GM will send the information to shareholders currently holding a total of 610.5 million outstanding shares.
GM spokeswoman Julie Gibson said the company is merely notifying shareholders of what it may do if it reaches deals to swap debt for stock with the Treasury Department and bondholders. The company, she said, is not making an offer to shareholders.
GM has received $15.4 billion in U.S. government loans and faces a June 1 deadline to restructure or be forced into Chapter 11 bankruptcy protection. Under GM's plan, the U.S. government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.
For the deal to work, GM has to reach agreement with the United Auto Workers to swap stock for about $10 billion of the $20 billion in payments GM must make into a trust fund that will take over retiree health care expenses starting next year. The UAW's stake would total about 39 percent. Bondholders would get 10 percent and current stockholders would get 1 percent.
http://apnews.myway.com/article/20090505/D980D2CG0.html
May 5, 7:52 PM (ET)
By KIMBERLY S. JOHNSON and TOM KRISHER
DETROIT (AP) - General Motors Corp. (GM) (GM) notified shareholders Tuesday it is planning a reverse stock split that would give them one share of new stock for every 100 shares they currently own.
The automaker said in a filing with the Securities and Exchange Commission that the deal would be part of an agreement with the Treasury Department in which the government would assume at least half of GM's debt in exchange for company shares. GM will send the information to shareholders currently holding a total of 610.5 million outstanding shares.
GM spokeswoman Julie Gibson said the company is merely notifying shareholders of what it may do if it reaches deals to swap debt for stock with the Treasury Department and bondholders. The company, she said, is not making an offer to shareholders.
GM has received $15.4 billion in U.S. government loans and faces a June 1 deadline to restructure or be forced into Chapter 11 bankruptcy protection. Under GM's plan, the U.S. government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.
For the deal to work, GM has to reach agreement with the United Auto Workers to swap stock for about $10 billion of the $20 billion in payments GM must make into a trust fund that will take over retiree health care expenses starting next year. The UAW's stake would total about 39 percent. Bondholders would get 10 percent and current stockholders would get 1 percent.
http://apnews.myway.com/article/20090505/D980D2CG0.html
