U.S. says still planning GM stock offering next year
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The Obama administration’s exit strategy for its investment in General Motors Corp. is a stock sale to the public sometime in 2010, an administration auto task force advisor reiterated today.
From Bloomberg News:
GM is in bankruptcy court today seeking approval to sell most of its assets to the Treasury, which is paying for the company with the more than $27 billion in loans it has made to the automaker. ‘We plan to sell our stake at some point,’ Harry Wilson, the auto task force advisor, testified, saying the government won’t make an open-ended commitment to fund GM. ‘We anticipate an IPO sometime in 2010.’
Some creditors have objected to the government’s deal for GM, arguing that a traditional Chapter 11 bankruptcy workout would be fairer.
Playing hardball, Wilson said the Treasury wouldn’t provide further financing to GM if an order approving the sale of most of the automaker’s assets isn’t signed by July 10.
Separately, GM again warned investors in its current shares that the stock almost certainly is worthless.
GM management has noticed the continuing high trading volume in GM’s common stock at prices in excess of $1. GM management continues to remind investors of its strong belief that there will be no value for the common stockholders in the bankruptcy liquidation process, even under the most optimistic of scenarios. Stockholders of a company in Chapter 11 generally receive value only if all claims of the company’s secured and unsecured creditors are fully satisfied. In this case, GM management strongly believes all such claims will not be fully satisfied, leading to its conclusion that GM common stock will have no value.
GM issued a similar warning on June 10, after trading in its shares shifted to the electronic pinksheets.com market and the stock rose as high as $1.59.
Today, more investors appeared to take the company at its word: The stock slumped after GM’s statement and closed at 91 cents a share, down from $1.09 on Tuesday and the lowest since June 5.
-- Tom Petruno