marayatano
14 years ago
Bankruptcies November 24, 2010, 5:00PM EST
A Stock Windfall for GM's Creditors
Warrants for 273 million shares may add to a $5 billion haul
By Tiffany Kary and Linda Sandler
Creditors of General Motors' (GM) bankrupt predecessor, who will likely get about $5 billion from the new automaker's $20 billion initial public offering, might be able to buy millions more new shares at a deep discount.
GM's bankrupt estate got 150 million shares, or 10 percent of stock in the new company, to help pay off creditors. At the Nov. 19 closing price of $34.26, that stock is worth about $5.1 billion. So-called old GM has warrants that entitle it to buy about 273 million additional shares at $10 to $18 each, according to the company's Nov. 17 filing with the U.S. Securities and Exchange Commission. The warrants will become even more valuable if GM shares rise. At least one analyst expects they will. "We value the shares of the new GM at $45," says Kirk Ludtke, a senior vice-president at CRT Capital Group in Stamford, Conn.
The estate's creditors received rights to the shares after GM bondholders with about 54 percent of the carmaker's $27 billion in debt agreed to support a plan that swapped debt for equity. The bankrupt company, now known as Motors Liquidation, is still counting up creditors' claims, which totaled $35.7 billion as of Sept. 30, according to its last monthly operating report.
If unsecured claims end up exceeding $35 billion, the estate would get at least 10 million additional GM shares. If claims go as high as $42 billion, creditors could get as many as 30 million new shares, according to the IPO documents. "The stock is certainly worth more than almost anyone thought at the time," says Chip Bowles, a bankruptcy lawyer at Greenebaum, Doll & McDonald in Louisville.
When GM filed for bankruptcy in June 2009, it sold its most valuable assets, including its Cadillac and Chevrolet divisions, to a new company. Unwanted properties, such as outmoded factories and its Saturn division, were left under bankruptcy-court protection and are to be liquidated under a plan that repays loans from the U.S. Treasury and Canada.
While the IPO revenue is a potential boost for creditors, some holders of the old GM's bonds believe they should be getting more money now that the company has been revived. "The big issue that will be debated for a long time is whether the value being raised in the IPO is really value that should have been part of the estate for old creditors," says Michael P. Richman, chairman of Patton Boggs' restructuring practice, who represented bondholders challenging the government's plan for GM in June 2009.
The creditors won't get any stock until they agree on a liquidation plan and a judge approves it. One unresolved issue is General Motors' asbestos liability, which GM's estate estimates at $648 million. A committee of creditors said in court filings that the amount may be 5 to 10 times that much. Lack of consensus on a plan is "delaying distribution to literally thousands of innocent creditors," U.S. Bankruptcy Judge Robert E. Gerber said in a Nov. 22 hearing.
The bottom line: GM's successful public offering is providing money to pay off creditors of the bankrupt company, who have warrants to buy more shares.
Kary is a reporter for Bloomberg News. Sandler is a reporter for Bloomberg News.
http://www.businessweek.com/magazine/content/10_49/b4206054196861.htm
marayatano
14 years ago
Really?
First day trading of GM deemed a success
Though it rose just over a dollar, Wall Streeters say GM's return to the market was a success
Bernard Condon, AP Business Writer, On Thursday November 18, 2010, 6:12 pm EST
NEW YORK (AP) -- GM's return to the public markets was a success.
That at least is the opinion of some market watchers who track initial public offerings like the one pulled off Thursday by the recently bankrupt General Motors Co. Sure, its stock only rose a little more than $1 from its offering price. But that apparently was plenty enough.
There are three big numbers on the first trading day of a new stock: The IPO price paid by select buyers before the stock begins trading, the price of the first trade and the closing price. The goal: What David Menlow of research firm IPO Financial Network calls a trifecta ---- higher numbers at each step.
General Motors hit two out of three. After being priced at $33 a share in the IPO, the stock opened at $35. It ended the day at $34.19, a gain of 3.6 percent, after trading as high as $35.99 in the first few minutes of trading. Almost 457 million GM shares traded, about one tenth of all trading of New York Stock Exchange shares.
"It's a delicate balance," said Menlow. "If you price the stock to exactly the demand, it's a recipe for failure. The people who got the IPO will be disappointed and look to sell."
And the difference between disappointment and success comes down to pennies.
One widely perceived failure was CIT Group's offering in July 2002. It began trading at $22.50, a mere 50 cents below the IPO price. Two years later, insurer Genworth Financial belly flopped on its first day. Its sin: It opened at 25 cents below its offering.
Under the circumstance, GM put in a solid performance. The fear was that the sheer size of GM's offering would keep investors on the sidelines. The U.S. government and other owners sold 478 million shares late Wednesday, the second biggest IPO dump by a U.S. company in history, according to Menlow. The top prize is held by Agere Systems Inc., which went public with 600 million shares in March 2001.
In the end, traders appeared to handle the onslaught without much trouble.
"We don't want a moonshot," said DME Securities trader Alan Valdez as the stock was drifting lower in midafternoon trading. "Then you worry people might start selling fast. You want to build a base. You want investors for the long term."
For all the attention on the first day, the real test may come in a month. That's when regulators allow stock analysts at banks that helped take GM public to publish reports recommending or panning the stock. Analysts are a notoriously overoptimistic and their reports are viewed with suspicion among professional investors. Yet a report urging people to buy or sell can still move shares sharply.
The stock will need to keep rising for taxpayers to have any hope of getting their $50 billion back from the GM bailout. The government got $11.8 billion selling about 40 percent of its stake in the automaker. To break even, it needs to unload the rest of its GM shares at an average $53 apiece.
That's more than 50 percent higher than the stock closed Thursday.
http://finance.yahoo.com/news/First-day-trading-of-GM-apf-2339978096.html?x=0
marayatano
14 years ago
CCYPQ is the bold. I have the RED.
Yes, that is the way I remember it. It was X amount of shares per $1,000.
Also, yes, you can trade your security on the yellow market. Call Etrade as ask for corporate action team or corporate action dept.
imo
GM Corp 9.40% Debs due 7/15/2021 370442AN5 $299,795,000.00 11/15/1990 7/22/1991
GM Corp 8.80% Notes due 3/1/2021 370442AJ4 $524,795,000.00 11/15/1990 3/12/1991
GM Corp 7.40% Debs due 9/1/2025 370442AR6 $500,000,000.00 11/15/1990 9/11/1995
GM Corp Medium Term Notes AG3 37045EAG3 $15,000,000.00 11/15/1990 7/22/1991
GM Corp Medium Term Notes AS7 37045EAS7 $48,175,000.00 11/15/1990 12/21/1990
GM Corp 7.75% Disc Debs due 3/15/2036 370442AT2 $377,377,000.00 12/7/1995 3/20/1996
GM Corp 7.70% Debs due 4/15/2016 370442AU9 $500,000,000.00 12/7/1995 4/15/1996
GM Corp 8.10% Debs due 6/15/2024 370442AV7 $400,000,000.00 12/7/1995 6/10/1996
GM Corp 6 3/4 Debs due 5/1/2028 370442AZ8 $600,000,000.00 12/7/1995 4/29/1998
GM Corp 7.20% Notes due 1/15/2011 370442BB0 $1,500,000,000.00 12/7/1995 1/11/2001
GM Corp 7.25% Q Int Bnds due 4/15/2041 370442816 $575,000,000.00 12/7/1995 4/30/2001
GM Corp 7 1/4 Sr Notes due 7/15/2041 370442774 $718,750,000.00 12/7/1995 7/9/2001
GM Corp 7.375% Sr Notes due 10/1/2051 370442766 $690,000,000.00 12/7/1995 10/3/2001
GM Corp 7.25% Sr Notes due 2/15/2052 370442758 $875,000,000.00 12/7/1995 2/14/2002
GM Corp 4.50% Series A Conv Sr Debs 370442741 $1,150,000,000.00 12/7/1995 3/6/2002
GM Corp 5.25% Series B Conv Sr Debs 370442733 $2,600,000,000.00 12/7/1995 3/6/2002
GM Corp 7.375% Sr Notes due 5/15/2048 370442725 $1,115,000,000.00 12/7/1995 5/19/2003
GM Corp 7.375% Sr Notes due 5/23/2048 370442BQ7 $425,000,000.00 12/7/1995 5/23/2003
GM Corp 8.375% Sr Debs due 7/15/2033 370442BT1 $3,000,000,000.00 12/7/1995 7/3/2003
GM Corp 6.250% Series C Conv Sr Debs 370442717 $4,300,000,000.00 12/7/1995 7/2/2003
GM Corp 8.25% Sr Debs due 7/15/2023 370442BW4 $1,250,000,000.00 12/7/1995 7/3/2003
GM Corp 7.125% Sr Notes due 7/15/201 370442BS3 $1,000,000,000.00 12/7/1995 7/3/2003
GM Corp 7.50% Sr Notes due 7/1/2044 370442121 $720,000,000.00 12/7/1995 6/30/2004
GM Corp 1.50% Series D Conv Sr Debs 370442691 $1,500,000,000.00 12/7/1995 5/31/2007
marayatano
14 years ago
FYI:
Q: What can holders of bonds that are identified on Wilmington Trust Company's notices expect with respect to payouts? Common stock in New GM, warrants, cash?
A: Persons holding bonds, notes, and debentures that are identified by the CUSIP numbers reflected on the front page of the Wilmington Trust Company notices are unsecured creditors of the estate of Motors Liquidation Company. Following the payment of priority claimants (if not satisfied though the "wind-down" budget provided by the U.S. Treasury), all unsecured creditors, including the bondholders, will ultimately receive a pro-rata share of the remaining assets of Motors Liquidation Company. Following the sale of substantially all of its assets to New General Motors in July 2009, the primary assets held by Motors Liquidation Company consist of (i) 10% of the common stock of New General Motors, and (ii) warrants to purchase up to 15% of common stock of New General Motors on a fully diluted basis. Through the liquidation process of Motors Liquidation Company, bondholders (together with all other unsecured creditors) will ultimately receive shares of the common stock and warrants held by Motors Liquidation Company.
Q: What is the dollar value of claims against the estate of Motors Liquidation Company? If the claims pool exceeds $35 billion, will additional stock be issued?
A: The number and amount of claims against the Debtors is currently unknown. November 30, 2009 was the bar date by which all proofs of claim against the Debtors were required to be filed. In the months following the passage of the bar date, the Debtors have begun the initial phases of resolving claims in order to determine the size of the creditor claim pool. Certain filed claims are likely to be disallowed. In the event that the total allowed general unsecured claims against the Debtors exceeds $35 billion, New General Motors has agreed to issue an additional 10,000,000 shares of common stock to Motors Liquidation Company (for ultimate distribution to its creditors).
Q: When can I expect a distribution from the bankruptcy estate?
A: On August 31, 2010, Motors Liquidation Company filed a plan of liquidation and disclosure statement with the Bankruptcy Court. Copies of the plan and disclosure statement are available on the section of this website entitled "Plan and Disclosure Statement." The plan and disclosure statement have not been approved by the Bankruptcy Court, and such approval is a prerequisite to the making of distributions from the bankruptcy estate. On October 21, 2010, the Bankruptcy Court conditionally approved the disclosure statement pending certain revisions and additional disclosures. To date, however, Motors Liquidation Company has not filed a revised version of the disclosure statement and final Bankruptcy Court approval is still pending. In addition, while Motors Liquidation Company initially indicated that it intended to seek approval of the plan prior to the end of calendar year 2010, no hearing with respect to confirmation of the plan has yet been scheduled. Wilmington Trust Company will provide further information on timing when such information becomes available.
Q: How does the New GM IPO impact the New GM stock held by Motors Liquidation Company?
A: Motors Liquidation Company holds 50 million shares of New GM common stock (approximately 10% of New GM common stock outstanding) and warrants to acquire approximately 91 million additional shares of New GM common stock (approximately 15% of New GM common stock on a fully diluted basis). In addition, if the total amount of allowed general unsecured claims against the Debtors exceeds $35 billion, Motors Liquidation Company may receive up to an additional 10 million shares of New GM common stock. The Debtors have previously indicated that such stock and warrants will be available for distribution to the Debtors' general unsecured creditors pursuant to a plan of liquidation. Motors Liquidation Company had the right to offer some or all of its New GM common stock and/or warrants in the IPO and consulted with the Official Committee of Unsecured Creditors (a representative body for all unsecured creditors on which Wilmington Trust sits) on whether or not to participate. Based upon the then available facts and circumstances, and upon a review of the detailed analysis of its professionals, the Official Committee of Unsecured Creditors determined that it was in the best interests of unsecured creditors to decline participation in the IPO. Among other reasons, the Official Committee of Unsecured Creditors determined that it was in the interests of individual creditors to retain the option to receive New GM securities (and the potential upside from any commensurate capital appreciation) or to liquidate the securities upon receipt for cash. Even though Motors Liquidation Company will not participate in the IPO, it is anticipated that the New GM common stock and warrants distributed to the Debtors' general unsecured creditors pursuant to a plan of liquidation will be freely tradable without registration under the securities laws or inclusion in the IPO.
http://www.wilmingtontrust.com/gmbondholders/faqs.html
marayatano
14 years ago
For you since you are pro-Ford:
Why Ford Is Still a 'Better Buy' Over GM: Analyst
On Thursday November 18, 2010, 12:14 pm EST
Stocks soared at the open and kept climbing on Thursday, lifted by the successful launch of General Motors, which opened at above $35 a share-higher than its initial price of $33 a share. What is the outlook for the automaker? David Silver, equity research analyst at Wall Street Strategies, shared his insights.
"A lot of the problems that were there are gone, but there are sill a few that really irk me about General Motors (NYSE: GM)-Europe, profitability overseas, particularly in China and India, and how they are going to pay for these pensions," Silver told CNBC.
"[GM] said it's going to take about 4 to 5 years," he continued. "They're not getting any money from this IPO, but hopefully they are able to pay off that pension and that's the biggest thing right now."
Silver also warned investors not to get roped into the hype around GM stock.
"If you go through the hype and once all that's into the stock, then you'll see the fundamentals that will push the stock," he said. "And they're not nearly as good as you can see for the Fords, Toyotas and the Nissans of the world because [GM] still has a lot of problems."
Instead, Silver said Ford Motor (NYSE:F - News) is a more attractive investment. Silver has a "buy" rating on Ford and has a $22 price target.
"I like Ford-it still looks like a better buy," he said. "Ford is still making cars that people want to buy."
http://finance.yahoo.com/news/Why-Ford-Is-Still-a-Better-cnbc-2685762748.html?x=0&sec=topStories&pos=4&asset=&ccode=
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
SwissCheeseAccount
4 years ago
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