General Motors Almost Less than $1 a Share
General Motors (NYSE:GM) shares dropped 20% today as investors feared significant dilution of their stock values or bankruptcy as the company approached a June 1 restructuring deadline.
In early trading, GM shares dropped to US$1.09, the lowest level since April 28, 1933, according to the Centre for Research in Security Prices at the University of Chicago. By midmorning they had rebounded to $1.15, still down 29 cents, or 20.1 per cent.
GM has received $15.4 billion in federal loans and is a little more than two weeks away from a government-imposed deadline to finish a restructuring plan or be sent into Chapter 11 bankruptcy protection.
The company has said it would prefer to restructure out of court, but chief executive Fritz Henderson said Monday that bankruptcy is more probable with so much to accomplish and the deadline closing in.
GM has offered bondholders 10 per cent of the company's equity in exchange for wiping out $27 billion in debt. The company also is negotiating with the U.S. government for a potential 50 per cent share of GM stock, and with the UAW to take 39 per cent in exchange for half of the $20 billion that the company owes the trust fund.
The remaining one per cent would go to those who hold the company's current 611 million outstanding shares.
Add to it the reports yesterday after the close that six executives liquidated each of their entire stock holdings in the automaker. The officers, including GM's former-Vice Chairman of Global Product Development, Bob Lutz, sold a total of 204,711 shares during last week and into this week.
Next stop for GM? 99 Cents.