Well, not officially. Officially, I’d be extremely surprised if GM doesn’t follow decades of precedent and save its ultimate bad news for either Friday (the 29th of May) or the weekend (a Sunday electronic filing). That said, the practice was designed to give the markets the weekend not to flip out about the latest red ink tsunami, fire sale, asset sale, etc. By now the market couldn’t give a shit, knowing as it does that General Motors stock is about to be completely worthless. Still, a new GM filing with the SEC [full press release after the jump] reveals that The General will report the failure to secure “debt reduction agreements” with the UAW and bondholders on May 27. Once that’s done, well, it’s all over bar the shouting.
DETROIT – General Motors (NYSE: GM) today filed a prospectus supplement with the Securities and Exchange Commission relating to its exchange offers for $27 billion of its unsecured public notes and the related consent solicitations that were commenced on April 27, 2009.
The prospectus supplement, which amends the information in GM’s Registration Statement on Form S-4 dated April 27, 2009 and GM’s Tender Offer Statement on Schedule TO filed on that date, provides an update regarding discussions with the U.S. Treasury, the UAW and the VEBA-settlement class representative and the satisfaction of conditions of the exchange offers. To date GM has not reached agreements with the aforementioned parties concerning the U.S Treasury debt conversion and financing commitment, VEBA modifications and other conditions of the exchange offer listed in the prospectus and does not currently expect to reach agreements prior to the May 26, 2009 expiration date and withdrawal deadline of the exchange offers.
GM expects to announce on May 27, 2009 whether the expiration date will be extended or whether the exchange offers have expired and will not be consummated for failure to satisfy one or more of the conditions.
In the event GM reaches agreement on one or more of the foregoing matters in connection with the exchange offers on or prior to May 26, 2009 (or to a later date, if the exchange offers are extended), it will disclose the terms of these agreements. Although withdrawal rights may not be extended or reinstated, holders would continue to have the right to tender old notes until the expiration or termination of the exchange offers.
The prospectus supplement filed today also includes changes made to the original prospectus, which were previously contained in the prospectus supplement dated May 14, 2009 previously filed with the Securities and Exchange Commission as part of Amendment No. 1 to GM’s Registration Statement on Form S-4. The registration statement was declared effective on May 15, 2009.
Except for the changes described in the prospectus supplement, all other terms of the exchange offers remain the same as in the original prospectus.
If GM stock is about to tank, then why is their stock at $1.27? Didn’t it dip below $1? Do people need the writeoffs so badly? Can a stock expert please explain?
FishTank:
I have the same question. If the trading volume was nothing, I could understand it..
No buyers would seem to lock the price in, but millions of shares are moving every day…
Makes no sense to me…
I gott’a quote a line from yesterday’s CAW update to members.
“The next few days will be worrisome and frightening”
Who knew!
Hell I’ve been worried and frightened for the last few years!I think I will keep myself busy the next few days.Detail the cars, do a little fishing.I sure don’t want to be anymore worried and frightened than I already am.
This morning, I drove past what used to be McGuire Buick/Pontiac/GMC in northern New Jersey. It’s now called “McGuire Used Car Center”.
FishTank – its called greed. If the stock is at 1.27 it only has to bump to 1.91 for a 50% return. Day traders, etc love cheap stocks with high volume.
It’s a lottery ticket investment. Day traders are playing for the swings. Others are buying dirt cheap in hopes that cruel Scythe of Bankruptcy passes them by and the stock rallies while in government custody.
I think your better off investing in Mega-Million tickets. They’re a lot more fun and have better odds;)
GM stock is not just not tanking, it’s skyrocketing (almost 15% @11AM). As others here, I’m completely puzzled. As my grampa used to say, if you see something that doesn’t make sense at all and goes against all logic, that means somebody-somewhere-somehow is making a lot of money out of it.
GM stock is experiencing a Dead Cat Bounce. GM puts are on sale today.
Re that graphic: If I had invested all the quarters I wasted on Battlezone almost 30 years ago I’d be living next door to Bob Lutz now.
26theone and NOCASTER- you are on the right line.
It’s circle the body time.
I’m new at options trading, if (ok, when) GM goes BK what happens to a put you have out there? I’m thinking one would want to have a date driven sell order in the system. Say for the 27th?
Like you hint , a put is very tempting but I would want to protect myself from disaster.
I would welcome any thoughts.
Bunter
I’m new at options trading, if (ok, when) GM goes BK what happens to a put you have out there? I’m thinking one would want to have a date driven sell order in the system. Say for the 27th?
Puts are the biggest gift in the event of a BK. Most likely the stock will sell of to about .01 and get moved to the pinks. Say you bought June 1 strike puts. If GM shares are worth .01 the put would have an intrinsic value of .99 per share, or $99 since each contract controls 100 shares. More than likely the puts won’t have any buyers so you just hold it until OpEx and let them exercise. At that point you would be short 100 shares for each put you owned. If the GM shares are worthless you just keep the proceeds and the broker will remove the short position.
nocaster-“If the GM shares are worthless you just keep the proceeds and the broker will remove the short position.”
Proceeds? As in the increase in the put value?
I was thinking in terms of running a put slightly in-the-money and selling before things were terminal. Are you saying that the put will still have value after the BK?
Ok, think I get it, I pay $99 (or what ever) per contract to cover the contract and then sell at my strike price to the broker for my profit? This will still go after BK?
I can see the potential of puts in this situation but am not aware of the risks involved with them in a BK.
Really appreciate your advise. Thanks.
Bunter
Proceeds? As in the increase in the put value?
All in the money options must clear upon expiration. In the case of a put, when it exercises you have sold short 100 shares at the strike price. If the company is BK and shares are worthless, the broker will remove the worthless shares and you keep the proceeds of that short sale that resulted from the option exercising. The counter party to this transaction was the person who wrote the put contract. They were required to sell you the shares at the strike price.
Here’s a good link that explains better than me.
http://www.optiontradingpedia.com/what_happens_to_options_during_bankruptcy.htm
Bunter,
I bought some June $2 puts today @ $1.25
I’m expecting the Lehman Bros example in the link supplied by nocaster to provide the template for GM (soon to be GM.PK, per prevailing wisdom), with me seeing a profit if GM.PK is below $.75 upon expiration.
One thing to watch out for is, for example, if you had $2 GM puts for May, and somehow exercised them such that you wound up with a short position in GM, you’d be liable for a margin call if shares of GM increased in value (as they’ve been doing) enough to warrant such an action from your brokerage.
Another thing to be aware of is that options aren’t as liquid as the underlying security (in my experience), so if you place a large market sell order (sell to close, in the case of put options) you might see the transaction price diverge from what market price was when you submitted the transaction.
Regards,
This is not directed at AMXtirpated per se, but in that explanation is all that wrong with the USA (and many other countries) right now.
Someone has $1.25 and rather than invest it into something job creating or productive, it’s gambled on one person having less perfect knowledge than another in their “holding” of a particular security.
There is absolutely nothing constructive or economically expansive about any of this.
People in the USA wonder why you have no manufacturing/innovative industry?????????????? China/India are way ahead of you.
You deserve to be a bankrupt Banana Republic.
nocaster & AMX- Thank you for your thoughts and help. I appreciate it.
PeteMoran- Or is it an act of retrieving wealth that others are in the act of destroying anyway?
Do I take the Porsche that someone is throwing away or let it go to the junkyard?
They have already made the bad decision without my coersion.
An analytically sound approach to investment is very far from gambling.
I have strong concerns as a Christian that I do not involve myself in morally questionable behavior. I think it maybe an over simplified view (though I agree that greed, in and out of the market, is a major part of our countries problems) on your part.
Thank you for your concerns and for stating them in a very decent manner.
Regards always,
Bunter
Well said, PeteMoran.
The US stock market has become little more than an electronic and largely on-line casino. Choose your number, place your bets, a net-sum game where only the house really gets ahead (thanks to trade commissions and market-driving insider connections/info, i.e. GS or JPMC). The illusion of economic activity, rather than actually investing in productive processes and job creating activities.
Strippo: “If I had invested all the quarters I wasted on Battlezone almost 30 years ago I’d be living next door to Bob Lutz now.”
And if I had all the hours back that I invested in the first BZ PC game as well as BZII, well, I’d not be eligible for membership in the AARP…
Fish Tank: “…about to tank….
Battlezone = tank game! (I hope you meant that!)
Sorry for the OT – bad news overload.