Wednesday, May 6, 2009

The Obama Takeover of GM Begins

In a filing yesterday with the SEC, GM announced that it would issue 60 billion new shares, in order to "pay off" debts to the government, its bondholders and the UAW. And since the government would end up being the majority owner, only the approval of the US Treasury will be needed.

As a result of the new shares,existing shareholders would end up owning 1% of the pro forma equity, and assuming straightmathematic dilution, the shares which closed at $1.85 would be worth a little over 1 cent.


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