GM shares fall on reverse stock split plan
DETROIT - Shares of
GM shares dropped 19 cents, or just over 10 percent, to $1.66.
After the market closed Tuesday, GM detailed the reverse split in a filing with the Securities and Exchange Commission.
GM said the reverse split would be part of an agreement with the Treasury Department in which the government would assume at least half of GM's debt in exchange for company shares.
GM spokeswoman Julie Gibson said the company is merely notifying shareholders of what it may do if it reaches deals to swap debt for stock with the Treasury Department and bondholders. The company, she said, is not making an offer to shareholders.
GM has received $15.4 billion in government loans and faces a June 1 deadline to restructure or be forced into Chapter 11 bankruptcy protection. Under GM's plan, the government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.
GM has to agree with the United Auto Workers to swap stock for about $10 billion of the $20 billion in payments GM must make into a trust fund that will take over retiree healthcare expenses starting next year.