Share price fall on reverse stock split of GM….
- Shares of General Motors Corp. tumbled yesterday after the automaker said it is planning a 1-for-100 reverse stock split. GM shares dropped 19 cents, or just over 10 percent, to $1.66.
- 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.
- 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.
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