Gm ipo

General Motors Is Going Public
By Chuck Squatriglia August 18, 2010 | 6:15 pm | Categories: Miscellaneous


GM’s turnaround is almost complete.

Today the General filed the first reams of paperwork needed to go public, a move that will free the automaker from government ownership and pay back the last of the billions it needed to stay afloat following its bankruptcy last year.

GM’s 700-page S-1 Registration form filed with the Securities and Exchange Commission begins the process that will lead to the initial public offering of stock. Although no date has been given for the IPO, analysts tell Reuters it could come as early as October. There also is no word on how many shares might be offered. The company’s stakeholders — including the U.S. Treasury and possibly the United Auto Workers and the Canadian government — will sell common stock. GM also will offer Series B preferred stock.

“The amount of securities offered will be determined by market conditions and other factors at the time of the offering,” the company said.

It was not clear how much stock Uncle Sam might want to unload, and details on how much money might be raised will come as we get closer to the sale. But the Los Angeles Times cites Renaissance Capital when it says the IPO could be among the largest IPOs in American history, rivaling the deal by Visa Inc. that raised $17.9 billion in March, 2008.

The U.S. Treasury poured some $50 billion into General Motors in 2008, a bailout that gave Uncle Sam 60.8 percent of GM’s stock. The bailout included a $6.7 billion loan through the Troubled Asset Relief Program. The Treasury Department said in a statement today that it would “retain the right, at all times, to decide whether and at what level to participate in the offering.”

Things have gone well for GM this year. Beyond paying back the TARP loan in April, the company has earned $2.2 billion in the first six months of 2010. The IPO announcement came one week after GM posted a second-quarter profit of $1.6 billion, its largest in six years.

“GM is rolling again – thanks the investment and patience of the American taxpayer,” U.S. Rep. John Dingell, D-Dearborn, told the Detroit Free Press. “I’m glad to see GM taking steps to pay that money back and putting Americans back to work.”

GM plans to trade on the New York and Toronto stock exchanges under its common symbol GM.

GM, founded on Sept. 16, 1908, was once among the most widely held stocks in the country. At its height, it had more than 1 million individual investors in the early 1960s. GM hit its highest market capitalization — $52 billion — in 2000, but its investors were almost completely wiped out when the company filed for bankruptcy in June, 2009. GM exited bankruptcy 40 days later.

:p: thank you, mr. president


anyone else going in?

Is it really an IPO if it used to be public?

Pretty awesome. It's amazing the turnaround they've been able to make. Kudos to them, and for paying us back!

Yippidee fucking doo dah.

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Originally Posted by Marcus Bryant

Yippidee fucking doo dah.

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Come now Marcus, it's like raising a child. You have to encourage small steps. :lol

GM IPO stock is fools gold for the stupid.

The US government has already fucked GM stockholders and bondholders once.

Big labor was the winner in the bailout.

Stockholders and bondholders will get fucked again next time too.

Clambake, you need to bet your life savings on the new GM.

So you wanted the stock and bond holders to be bailed out?

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Originally Posted by ChumpDumper

So you wanted the stock and bond holders to be bailed out?

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You are smarter than that.

I thought.

Bond holders at a minimum should have at LEAST gotten a percentage on the dollar.

That's how corporate bonds work. They are first tier in a bankruptcy/liquidation.

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Originally Posted by CosmicCowboy

You are smarter than that.

I thought.

Bond holders at a minimum should have at LEAST gotten a percentage on the dollar.

That's how corporate bonds work. They are first tier in a bankruptcy/liquidation.

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So you wanted them at least partially bailed out?

How do you think the system works?

Bondholders are the people that loaned them the money to do business.

They took their savings and LOANED them to GM with the promise that they would get a small return (probably 100 basic points over treasuries) in what normally was a safe investment.

In a normal scenario, GM would have gone into bankruptcy and those bondholders would have had first claim on the assets as they were liquidated.

That's not what happened. Those people who invested their savings in GM were wiped out and the UNIONS got GM.

Pure political payback.

Yeah, the bondholders should have gotten something.

50 BILLION of savings stolen.

50 BILLION of savings wiped out.

If the US government can do that, why should anyone invest in US corporate bonds?

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Originally Posted by CosmicCowboy

How do you think the system works?

Bondholders are the people that loaned them the money to do business.

They took their savings and LOANED them to GM with the promise that they would get a small return (probably 100 basic points over treasuries) in what normally was a safe investment.

In a normal scenario, GM would have gone into bankruptcy and those bondholders would have had first claim on the assets as they were liquidated.

That's not what happened. Those people who invested their savings in GM were wiped out and the UNIONS got GM.

Pure political payback.

Yeah, the bondholders should have gotten something.

50 BILLION of savings stolen.

50 BILLION of savings wiped out.

If the US government can do that, why should anyone invest in US corporate bonds?

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I wouldn't have invested in GM back then.

Bad risk.

Now?

Maybe.

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Originally Posted by ChumpDumper

I wouldn't have invested in GM back then.

Bad risk.

Now?

Maybe.

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Back then when?

Bonds are supposed to be safe long term investments. GM was "blue chip". There are people that invested in them way back before 2000 for their retirement that got wiped out. zero. so sorry. We just changed the rules. You aren't a secured investor anymore. We just took your life savings and gave it to the UAW. They will own GM from now on.

It was a totally unprecedented fucking of average investors that got no press at all.

50 fucking BILLION.

Chump, I know you like to be difficult just to be adversarial but PLEASE tell me you don't think this was right...

Gotta agree with CC here. Bondholders should have gotten something back, you would think. At the least, they should be recompensed the amount of stocks they had.

I agree that it should have gone through a real bankruptcy, but I don't shed a tear for investors if they weren't smart enough to be diverse and recognize a company that was making tragically shitty cars. If you believe in risk, accept it.

cc hedging his bets by walking backward. lol

The company is making profit although I would feel better if Whitacre had stayed on as CEO

Quote:

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Originally Posted by ChumpDumper

I agree that it should have gone through a real bankruptcy, but I don't shed a tear for investors if they weren't smart enough to be diverse and recognize a company that was making tragically shitty cars. If you believe in risk, accept it.

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From what I've read that was unsecured bond debt...so CC does want an investor bail-out when they accepted the risk for a greater return...TFB...

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Originally Posted by ChumpDumper

I agree that it should have gone through a real bankruptcy, but I don't shed a tear for investors if they weren't smart enough to be diverse and recognize a company that was making tragically shitty cars. If you believe in risk, accept it.

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lmao, my tragically shitty gm vehicle has 110k and has had 0 problems.

I made a nice chunk buying GM pre-bailout @ $2.31/share and selling immediately thereafter @ $5.50.
I'm interested to see what it opens at. I might be in for a little bit.

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Originally Posted by EmptyMan

lmao, my tragically shitty gm vehicle has 110k and has had 0 problems.

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lol...I've got an old 93 S-10 extended cab. It's my weekend, run-to-Home Depot-truck, except I drove it almost everyday for about 6 months when I had a brace of Fords crap out on me. 225,000 miles. I replaced the clutch at 150,000, put 1 alternator on it, and I'm about to put a starter on it...that's it.

Ugly as hell, but you can't kill it.:lol

GM might be a good stock play out of the gate while traders are all abuzz about the IPO, but I don't see this as a buy and hold one. After what happened to the bondholders GM is going to have a hard time borrowing money and will have to pay significantly higher interest rates. That will be a drag on their growth prospects.

Quote:

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Originally Posted by ChumpDumper

I agree that it should have gone through a real bankruptcy, but I don't shed a tear for investors if they weren't smart enough to be diverse and recognize a company that was making tragically shitty cars. If you believe in risk, accept it.

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Are you justifying the govt's actions??

Is sanctioned theft which is what this really is, okay??

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Originally Posted by TeyshaBlue

I made a nice chunk buying GM pre-bailout @ $2.31/share and selling immediately thereafter @ $5.50.
I'm interested to see what it opens at. I might be in for a little bit.

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?????

When they did the pre-packaged deal the original shareholders were wiped out. You must have sold on one of the rumors and not the official bailout.

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Originally Posted by CosmicCowboy

?????

When they did the pre-packaged deal the original shareholders were wiped out. You must have sold on one of the rumors and not the official bailout.

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I don't know if this is what TB was talking about, but the shareholders were not immediately wiped out. Their shares were put in a holding company trading under GMQ (if I remember correctly). It was still trading at a high volume because some people (mistakenly) thought that the shareholders would be given shares in the new GM IPO. The SEC feared that this could cause an uproar when people "found out" (the info was already out there) that they would not make it through bankrupcy. They even changed the trading symbol to MTLQQ (Q denotes bankrupcy, they added a second Q in order to be more forceful). This is when the stock truely dropped and traded in the 0.50 range. It was full of pumpers and dumpers, but it even climbed back to around 1.50 when good news about GM would come out (all numbers are from memory so don't crucify me if I am a little off). Not saying that TB DID DO this, however this is how it COULD have happened.

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Originally Posted by Ignignokt

Are you justifying the govt's actions??

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I said it should have gone through a real bankruptcy. Apparently you can't read.

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Is sanctioned theft which is what this really is, okay??

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It is one of many possible outcomes when one risks his or her money. If you don't believe in risk and want everyone to be bailed out in every situation, fine.

The government deliberately circumventing bankruptcy laws to benefit a favored political contributor wasn't part of the risk the bondholders agreed to take on.

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Originally Posted by coyotes_geek

The government deliberately circumventing bankruptcy laws to benefit a favored political contributor wasn't part of the risk the bondholders agreed to take on.

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What risks did they agree to take on?

Do you have a list?

Link?

Quote:

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Originally Posted by ChumpDumper

It is one of many possible outcomes when one risks his or her money. If you don't believe in risk and want everyone to be bailed out in every situation, fine.

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The problem there, Chump, is that Corporate Bonds are typically not high risk investments. Many of the long GM bonds that were defaulted on were initially highly rated...it wasn't until 2005 that they were downgraded. even then, historical precedent was that they would be top tier secured creditors in a bankruptcy...after the assets were sold the bondholders would be the first to be paid.

Instead, the bondholders were told "sorry, you are shit out of luck' and they just wiped out the debt and gave the company to the UAW.

VERY bad form. I find it hard to believe that you are actually defending this.

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Originally Posted by CosmicCowboy

The problem there, Chump, is that Corporate Bonds are typically not high risk investments. Many of the long GM bonds that were defaulted on were initially highly rated...it wasn't until 2005 that they were downgraded. even then, historical precedent was that they would be top tier secured creditors in a bankruptcy...after the assets were sold the bondholders would be the first to be paid.

Instead, the bondholders were told "sorry, you are shit out of luck' and they just wiped out the debt and gave the company to the UAW.

VERY bad form.

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So they knew they were increasingly risky investments for four years?

VERY bad decision making.

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Originally Posted by ChumpDumper

What risks did they agree to take on?

Do you have a list?

Link?

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If you really need a link and a list explaining how bonds work then this topic is over your head.

someone saved the company and jobs.

why u hate amerika?

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Originally Posted by coyotes_geek

If you really need a link and a list explaining how bonds work then this topic is over your head.

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You claim to know all of the risks bondholders take.

Let's see them.

Quote:

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Originally Posted by CosmicCowboy

?????

When they did the pre-packaged deal the original shareholders were wiped out. You must have sold on one of the rumors and not the official bailout.

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You're right...when it was confirmed that GM would seek a bailout, the share price jumped and I sold. I went back and looked at the screen shot of the sale. I actually sold at $4.98. Doh! I sold on 11/26/2008. The Fed loans were granted 12/19/08.

I could've ridden it longer and made a bit more, but it was a very good return at sale, so I can't complain.

TeyshaBlue was a smart investor in this case.

The people who held on or bought in? Not so much -- but they assumed the risk.

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Originally Posted by ChumpDumper

TeyshaBlue was a smart investor in this case.

The people who held on or bought in? Not so much -- but they assumed the risk.

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You are confusing the relative risk of stocks and bonds. It is virtually unheard of for bondholders to be wiped out.

If a "regular" company tried that in bankruptcy they would get laughed out of the bankruptcy court and the attorney that proposed it would probably be disbarred for ignorance.

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Originally Posted by ChumpDumper

You claim to know all of the risks bondholders take.

Let's see them.

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You claim to not know them. If you're seriously interested in the topic then go learn. Google is your friend.

bonds are risky. period.

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Originally Posted by CosmicCowboy

You are confusing the relative risk of stocks and bonds. It is virtually unheard of for bondholders to be wiped out.

If a "regular" company tried that in bankruptcy they would get laughed out of the bankruptcy court and the attorney that proposed it would probably be disbarred for ignorance.

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So it's not actually unheard of.

Thanks again.

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Originally Posted by coyotes_geek

You claim to not know them. If you're seriously interested in the topic then go learn. Google is your friend.

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I'll take that as an admission that you don't know either. Otherwise it would have been easy for you to say.

Thank you, too.

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Originally Posted by clambake

bonds are risky. period.

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They are virtually unrisky!

"virtually"

"unheard"

"of"

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Originally Posted by ChumpDumper

I'll take that as an admission that you don't know either. Otherwise it would have been easy for you to say.

Thank you, too.

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And I'll take that as an admission that you weren't really interested in learning about bonds. Otherwise it would have been easy for you to look up the information. Glad we've got that settled.

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Originally Posted by ChumpDumper

So it's not actually unheard of.

Thanks again.

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On further research I can find NO cases where the bondholders were wiped out in bankruptcy. I had vaguely remembered some bondholders might have gotten hurt in the huge asbestos litigation settlement but they were made completely whole too as part of the agreement.

If you can find a SINGLE CASE where the bondholders were wiped out in a bankruptcy hearing feel free to refute me.

would you have preferred the company be wiped out, solely for shareholder benefits?

Quote:

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Originally Posted by ChumpDumper

I said it should have gone through a real bankruptcy. Apparently you can't read.

It is one of many possible outcomes when one risks his or her money. If you don't believe in risk and want everyone to be bailed out in every situation, fine.

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It's the bondholders fault for the govt stealing their assets. Okay :tu

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Originally Posted by clambake

would you have preferred the company be wiped out, solely for shareholder benefits?

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Shareholders or bondholders? The shareholders got exactly what they deserved, which is jack squat.

Quote:

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Originally Posted by coyotes_geek

And I'll take that as an admission that you weren't really interested in learning about bonds. Otherwise it would have been easy for you to look up the information. Glad we've got that settled.

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Nah, I was asking you directly to see if you really knew.

You didn't know at all.

Glad we've got that settled.

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Originally Posted by CosmicCowboy

On further research I can find NO cases where the bondholders were wiped out in bankruptcy. I had vaguely remembered some bondholders might have gotten hurt in the huge asbestos litigation settlement but they were made completely whole too as part of the agreement.

If you can find a SINGLE CASE where the bondholders were wiped out in a bankruptcy hearing feel free to refute me.

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This wasn't a bankruptcy. It should have been. But it wasn't. Bondholders knew that was a risk.

Quote:

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Originally Posted by clambake

would you have preferred the company be wiped out, solely for shareholder benefits?

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Are you so fucking stupid you don't know the difference between stocks and bonds?

bondholders are subject to market risks, too.

Quote:

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Originally Posted by clambake

bondholders are subject to market risks, too.

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They are virtually not!

Quote:

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Originally Posted by ChumpDumper

This wasn't a bankruptcy. It should have been. But it wasn't. Bondholders knew that was a risk.

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Are you kidding? The bondholders were supposed to know that the fucking US GOVERNMENT was going to DENY them a bankruptcy hearing and steal their money?

There was ZERO precedent for that.

NONE

Quote:

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Originally Posted by clambake

bondholders are subject to market risks, too.

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The only risk bondholders normally have is interest rate related as it affects the current value of the bond. If they are simply planning to buy and hold and clip coupons there is essentially no risk unless the government decides to steal your money.

Quote:

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Originally Posted by CosmicCowboy

Are you kidding? The bondholders were supposed to know that the fucking US GOVERNMENT was going to DENY them a bankruptcy hearing and steal their money?

There was ZERO precedent for that.

NONE

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TeyshaBlue saw it coming. I know stocks are different, but it was clear they were looking for something other than a bankruptcy. Bondholders expecting to be treated as they would in a bankruptcy weren't very smart, or they chose to assume the risk they would be.

Quote:

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Originally Posted by CosmicCowboy

The only risk bondholders normally have is interest rate related as it affects the current value of the bond. If they are simply planning to buy and hold and clip coupons there is essentially no risk unless the government decides to steal your money.

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This was not a normal situation and essentially there was risk.

The smart and risk-averse saw it coming.

Quote:

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Originally Posted by clambake

bondholders are subject to market risks, too.

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They are, but those risks are limited via bankruptcy laws which put them at the head of the line when a company goes under. According to the bankruptcy laws the only scenario I can think of where bondholders would get completely wiped out would be if a company somehow managed to enter bankruptcy with $0 in assets.

Quote:

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Originally Posted by CosmicCowboy

The only risk bondholders normally have is interest rate related as it affects the current value of the bond.

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see, you got it. it's all right there.

Quote:

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Originally Posted by coyotes_geek

They are, but those risks are limited via bankruptcy laws which put them at the head of the line when a company goes under. According to the bankruptcy laws the only scenario I can think of where bondholders would get completely wiped out would be if a company somehow managed to enter bankruptcy with $0 in assets.

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This wasn't a bankruptcy.

Quote:

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Originally Posted by coyotes_geek

They are, but those risks are limited via bankruptcy laws which put them at the head of the line when a company goes under. According to the bankruptcy laws the only scenario I can think of where bondholders would get completely wiped out would be if a company somehow managed to enter bankruptcy with $0 in assets.

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their debt was greater than their assets.

Quote:

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Originally Posted by clambake

their debt was greater than their assets.

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Which is why they wouldn't have gotten $1.00 / $1.00. Nor should they have. Still, they deserved to get something > $0.

Quote:

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Originally Posted by clambake

see, you got it. it's all right there.

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No it's not, shithead.

If you buy a bond for retirement with an 8% coupon with the intention of holding it there is normally no risk. You don't care about the day to day fluctuation of the bond price as interest rates rise and fall because you aren't trading the bond.

In this case, the government stepped in and denied the bondholders their rights to a GM bankruptcy and flat out stole their money.

You guys can dance around and play your cute word games by picking on specific qualifying words I use but it was THEFT. Plain and simple.

shithead?

Did you lose bond money in GM, CC?

and you can't dance around those qualifying words.

because they are the reality.

What has happened at GM ...

http://articles.moneycentral.msn.com...f-2010-gm.aspx

Quote:

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The holders of $27 billion of GM's public debt, as well as other creditors, got a 10% equity stake, plus warrants for an additional 15% of the company.

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... does not seem all that different from this example ...

http://en.wikipedia.org/wiki/Bond_%28finance%29

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There is no guarantee of how much money will remain to repay bondholders. As an example, after an accounting scandal and a Chapter 11 bankruptcy at the giant telecommunications company Worldcom, in 2004 its bondholders ended up being paid 35.7 cents on the dollar. In a bankruptcy involving reorganization or recapitalization, as opposed to liquidation, bondholders may end up having the value of their bonds reduced, often through an exchange for a smaller number of newly issued bonds.

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... and seems in line with what general info I could easily find.

http://stocks.about.com/od/investing...2709busted.htm

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Bondholders may receive some payment, but often have their bonds converted to shares of stock in the reorganized company.

If the company emerges from bankruptcy and does well, the previous bondholders (now stockholders) may come out OK. However, some companies don’t survive even after Chapter 11.

...

If you own stocks or bonds in a company the files for Chapter 7 bankruptcy, you will probably receive nothing for your investment. Bondholders may receive a partial payment, but not always.

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http://stocks.about.com/od/understan...21308bank3.htm

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What happens to bond owners?

As noted in Part 2 of this series, bondholders are second in line for proceeds in either reorganization (Chapter 11) or liquidation (Chapter 7).

Under the best of circumstances, bond owners may receive pennies on the dollar in a Chapter 11 and could possibly receive some of the proceeds from Chapter 7 liquidation.

It is unlikely that bondholders will see their original principal returned.

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Quote:

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Originally Posted by spurster

What has happened at GM ...

http://articles.moneycentral.msn.com...f-2010-gm.aspx

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Wait.

So they weren't wiped out?

The agreement, revealed in a Securities and Exchange Commission filing by GM (GM, Fortune 500) early Thursday, would essentially give the bondholders 10% of the company but also give them the rights to buy an additional 15% of the company's stock at a low price.

http://money.cnn.com/2009/05/28/news...ion=2009052810

So if these are still the terms (anyone is free to correct me here), former bondholders could make quite a bit of money from this IPO.

Is that a correct assumption, CC?

Quote:

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Originally Posted by ChumpDumper

Wait.

So they weren't wiped out?

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That remains to be see. So far their new "stock" is worthless.

The fact remains that the bondholders were SENIOR CREDITORS and their claim was subordinated to the claims of an UNSECURED CREDITOR (The United Auto workers). The unsecured creditor ended getting almost twice as much "stock" in the new company as the secured creditor.

Quote:

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Originally Posted by ChumpDumper

The agreement, revealed in a Securities and Exchange Commission filing by GM (GM, Fortune 500) early Thursday, would essentially give the bondholders 10% of the company but also give them the rights to buy an additional 15% of the company's stock at a low price.

http://money.cnn.com/2009/05/28/news...ion=2009052810

So if these are still the terms (anyone is free to correct me here), former bondholders could make quite a bit of money from this IPO.

Is that a correct assumption, CC?

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No it is not a correct assumption. The two are unrelated. The bondholders who had 100% of old GM debt still only own 10% of "new" GM which is still essentially worthless. Any money from the IPO goes to pay off the Feds and is not invested in productive capacity as is normal with IPO money.

Quote:

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Originally Posted by CosmicCowboy

That remains to be see. So far their new "stock" is worthless.

The fact remains that the bondholders were SENIOR CREDITORS and their claim was subordinated to the claims of an UNSECURED CREDITOR (The United Auto workers). The unsecured creditor ended getting almost twice as much "stock" in the new company as the secured creditor.

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So you are saying they weren't wiped out.

Thanks.

Here's more:

The original bondholders have been hammered -- the debt traded at 95 cents on the dollar as recently as 2007 -- but prices have tripled from about 10 cents since before the bankruptcy filing as Wall Street has warmed to the company's story.

The debt carries obvious risk, given the uncertain recovery value. Many institutional investors avoid such complex distress-debt situations....

....GM bond bulls, including analysts at JPMorgan and Morgan Stanley, have argued that the debt could rise to 40 cents on the dollar if the company's recovery plays out and equity investors gravitate toward the debt ahead of an IPO. Probably the best plays are GM's old convertible debt, including the 6.25% and 5.25% issues formerly listed under the tickers GPM and GBM. They trade for about $6.50 -- 26% of their $25 face value.

http://articles.moneycentral.msn.com...f-2010-gm.aspx

Things have probably changed since March, but equity in the company and a possible 40% of the initial bond investment?

It's clear the unions got the better deal (though they made several billions of dollars worth of concessions as well), but how much better do you think the bondholders would have made out through a traditional bankruptcy?

Quote:

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Originally Posted by CosmicCowboy

No it is not a correct assumption. The two are unrelated. The bondholders who had 100% of old GM debt still only own 10% of "new" GM which is still essentially worthless. Any money from the IPO goes to pay off the Feds and is not invested in productive capacity as is normal with IPO money.

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If a bondholder owns stock and buys more stock at a low price, and the price goes up after an IPO, does that bondholder make any money?

Yes or no.

Quote:

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Even if the debt rallies, bondholders will fare the worst, reflecting the restructuring of GM by the Obama administration that favored the union over bondholders despite their similar legal claims. The union is also apt to do better than taxpayers, based on its sweet deal.

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I guess the original bondholders no longer own that debt, but a majority of them agreed to the terms of the deal -- so contrary to what has been claimed in this thread, they knew exactly what was happening.

Quote:

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Originally Posted by ChumpDumper

If a bondholder owns stock and buys more stock at a low price, and the price goes up after an IPO, does that bondholder make any money?

Yes or no.

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Three if's to end up making money?

I think you should buy GM bonds, CHUMP since you think they are such a fucking good investment.

In short:

1) The bondholders weren't completely wiped out.

2) The majority of bondholders approved of the deal that was reached outside of bankruptcy.

Quote:

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Originally Posted by ChumpDumper

I guess the original bondholders no longer own that debt, but a majority of them agreed to the terms of the deal -- so contrary to what has been claimed in this thread, they knew exactly what was happening.

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Actually only 20% agreed (some of the institutional investors that had bought in at the end on the cheap) and it was crammed down on the others.

Quote:

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Originally Posted by CosmicCowboy

Three if's to end up making money?

I think you should buy GM bonds, CHUMP since you think they are such a fucking good investment.

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Looks like it tripled in value since its low point. That probably won't happen again.

I understand you are upset since everything you were arguing here turned out to be completely false, but resorting to straw men again is just pathetic.

Quote:

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Originally Posted by CosmicCowboy

Actually only 20% agreed (some of the institutional investors that had bought in at the end on the cheap) and it was crammed down on the others.

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Take it up with the Wall Street Journal:

Majority of GM Bondholders Back Debt-for-Equity Deal


http://online.wsj.com/article/NA_WSJ...042969721.html

Quote:

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Originally Posted by CosmicCowboy

No it is not a correct assumption. The two are unrelated. The bondholders who had 100% of old GM debt still only own 10% of "new" GM which is still essentially worthless. Any money from the IPO goes to pay off the Feds and is not invested in productive capacity as is normal with IPO money.

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As I understand it the shares for the IPO are going to come from two sources. The govt is going to sell off just enough of it's stake in the company so that they own less than 50% of it. Those proceeds go to the Treasury. There are also going to be new preferred shares created, the proceeds of which go to the company. Those new preferred shares will also end up diluting the shares that the bondholders received.

Quote:

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Originally Posted by ChumpDumper

Take it up with the Wall Street Journal:

Majority of GM Bondholders Back Debt-for-Equity Deal


http://online.wsj.com/article/NA_WSJ...042969721.html

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So someone told WSJ 54% approved.

CNN at the same time said 20%.

http://money.cnn.com/2009/05/28/news...ion=2009052810

I honestly don't know the exact number but I know it was the speculators that bought discounted bonds that cut the deal.

Quote:

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Originally Posted by CosmicCowboy

So someone told WSJ 54% approved.

CNN at the same time said 20%.

http://money.cnn.com/2009/05/28/news...ion=2009052810

I honestly don't know the exact number but I know it was the speculators that bought discounted bonds that cut the deal.

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From your article:

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According to GM's filing, advisors to the unofficial committee of major bondholders which accepted the deal hold about 20% of $27 billion in unsecured bonds.

The administration official said that about 15% of the bondholders not represented by the committee accepted the original deal. The official added it will now be up to the committee to round up additional support from other bondholders.

The remaining bondholders have until Saturday afternoon to indicate whether they support the new offer.

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Since this article was written on a Friday and the rest of the bondholders had until Saturday afternoon to approve, I will assume a majority did so which was reflected in the WSJ article the following Monday.

its better this way. gm wouldn't be the only one suffering.

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Originally Posted by clambake

its better this way. gm wouldn't be the only one suffering.

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hooray for corporate welfare and trickle down economics.

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Originally Posted by coyotes_geek

hooray for corporate welfare and trickle down economics.

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sub contractors and jobs. taxes and families. another death for american manufacturing.




hooray it's still breathing.

did you ever consider that?

seems like a ponzi scheme

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Originally Posted by clambake

sub contractors and jobs. taxes and families. another death for american manufacturing.

hooray it's still breathing.

did you ever consider that?

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Yes, I have considered it. Your case for how important it is to hold taxpayers liable for private business losses is very compelling.

in the long run, i think it's important for america's manufacturing base.

they are paying back their bailout.......in case you didn't notice.

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Originally Posted by clambake

in the long run, i think it's important for america's manufacturing base.

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According to GM's own IPO filing about only about 1/4 of the cars they build are getting built in North America these days. That 1/4 includes Canada and Mexico.

By next year GM will be building cars in China and importing them into the U.S.

So who's manufacturing base are we really supporting?

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they are paying back their bailout.......in case you didn't notice.

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They're not going to come anywhere close to paying back the full amount they were given.

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Originally Posted by coyotes_geek

According to GM's own IPO filing about only about 1/4 of the cars they build are getting built in North America these days. That 1/4 includes Canada and Mexico.

By next year GM will be building cars in China and importing them into the U.S.

So who's manufacturing base are we really supporting?

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the current base of american workers. would you like these car companies to be forced into using american factories only?

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They're not going to come anywhere close to paying back the full amount they were given.

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how close?

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Originally Posted by clambake

how close?

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Well considering that all they have done so far is use government money to pay back government money to get more government money I would say not close at all.

They took 6.7 Billion out of a 13.4 billion escrow account created by the government when they were in bankruptcy (the escrow account was for working capital) to pay the original "loan" back (the other 40+ billion they gave GM was for stock) so they could borrow another 10 Billion from DOE to meet new CAFE standards.

In truth, they haven't paid back a fucking dime and have borrowed an additional 3.3 Billion.

so, you're saying they're not paying back?

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Originally Posted by clambake

the current base of american workers. would you like these car companies to be forced into using american factories only?

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What I'd like is to not be in the corporate welfare business. But I've accepted that I'm in the minority on that.

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how close?

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Not very. Basically GM would have to achieve a market capitalization twice as big as they ever were while only making about half the cars for the shares the treasury owns to be worth the money put into GM. Not going to happen.

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Originally Posted by clambake

so, you're saying they're not paying back?

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uhhhhh...yeah. I'm saying when GM gives the US 6.7 Billion and then turns around and borrows 10 Billion that they didn't "pay back" shit and instead borrowed an additional 3.3 Billion.

It really IS simple third grade math.

GM builds cars abroad and the foreigh auto makers build cars hear. The problem for GM was the inability to compete with the imports on cost driven primarily by their crippling union contracts.

The order of liquidation is secured lien holders, bondholders and then stock holders. Where do union members fit in? The only claim they would have would be for unpaid earned wages. Those claims didn't exist.

If the union labor was given a choice of restructuring their deal to fall in line with what the going rate for their skill was or be unemployed I am confident the majority would take the job. That leaves the bondholders to have their fate determined by the normal process of bankruptcy liquidation.

I agree GM should have been helped. But this was a bone thrown to union labor by Obama at the expense of the bondholder and taxpayer.

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Originally Posted by CosmicCowboy

uhhhhh...yeah. I'm saying when GM gives the US 6.7 Billion and then turns around and borrows 10 Billion that they didn't "pay back" shit and instead borrowed an additional 3.3 Billion.

It really IS simple third grade math.

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you didn't answer the question, unless you're implying that they'll never pay back.

for the record, is that what you're implying?

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Originally Posted by clambake

you didn't answer the question, unless you're implying that they'll never pay back.

for the record, is that what you're implying?

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Of course I answered you question. Can you add and subtract? They have not paid any loans back and in fact have borrowed an additional 3.3 billion.

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Originally Posted by CosmicCowboy

Of course I answered you question. Can you add and subtract? They have not paid any loans back and in fact have borrowed an additional 3.3 billion.

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At least the company is turning a profit now.

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Originally Posted by CosmicCowboy

Of course I answered you question. Can you add and subtract? They have not paid any loans back and in fact have borrowed an additional 3.3 billion.

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they just recently turned a profit. i'm not implying that they have paid back. i'm implying that there's a plan (success or failure to be determined) to start paying back.

have you concluded that they'll never pay back?

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Originally Posted by clambake

they just recently turned a profit. i'm not implying that they have paid back. i'm implying that there's a plan (success or failure to be determined) to start paying back.

have you concluded that they'll never pay back?

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I have concluded that the US will never get back any substantial portion of the 50 billion they put into GM. Will they EVER get ANY back? Probably some token repayments that will be heavily publicized. Eventually other things will take front and center priority and the public will just forget about the GM loans.

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Originally Posted by Cry Havoc

At least the company is turning a profit now.

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Not that hard to turn a profit when the government comes along, gives you a boatload of cash and tells everyone you owe money to to piss off.