Yesterday, in a filing with the Securities and Exchange Commission, General Motors announced that it is currently attempting to restructure debt held by the U.S. Treasury Department. Under a current proposal, GM would convert at least 50% of its debt held by the U.S. Treasury Department into common shares. As a result of the conversion Treasury would hold greater than 50% of GM’s common shares. According to the filing, a Preliminary Information Statement on Schedule 14C, the current negotiations contemplate several significant alterations to the structure of GM's common stock:
- An increase the number of authorized shares of GM common stock to 62 billion shares.
- A reduction the par value of GM common stock from $1 2/3 per share to $0.01 per share.
- A 1-for-100 reverse stock split of GM common stock, whereby each 100 shares of GM common stock registered in the name of a stockholder at the effective time of the reverse stock split will be converted into one share of GM common stock.
The filing notes that GM and Treasury have yet to reach an agreement and the terms disclosed are subject to change.
Separately, the UAW has sent to members of the Senate a letter objecting to GM's latest restructuring plan. The UAW specifically objects to GM's proposal to close "16 manufacturing facilities in this country, including four assembly plants," resulting "in the direct loss of 21,000 jobs," while simultaneously proposing "a 98% increase in the number of vehicles it will be importing into the United States from Mexico, Korea, Japan and China, with the number of imports from these countries increasing from 371,547 to 736,743," a number the UAW points out "represents the production of four assembly plants, the same number that GM plans to close in the United States." The UAW letter urges senators to "join us in calling on the Obama administration to insist, as part of the terms of any further government assistance, that GM be required to maintain the maximum number of jobs in the U.S., instead of outsourcing more production to other countries."