The difference between new and old? None

People ask what’s the value of the shares of the old GM.
The answer is: nothing.
It’s a penny stock on his way to zero.
What will be the value of shares in the new GM?
Well, because the old GM’s US pension fund with almost 100.000 million USD in liabilities is transferred to the new GM, the shares of the new entity could be worth as much as the old shares in a couple of years.

Sphere: Related Content

The taxpayer is giving some money away.

The terms for walking out of GM are published here.
Taxpayers are paying the following:

- GM is offering $20,000 cash and a $25,000 car voucher to production workers who decide to retire with their benefits.
- For skilled-trades workers, the cash portion of the retirement package is $45,000 with the same car voucher.
- For those not eligible to retire, GM also is offering more cash to walk away and sever all ties with the company, along with the $25,000 car voucher.
- Employees with less than 10 years could get $45,000. Those with at least 10 years but less than 20 are being offered $80,000. For those with 20 years or more, it’s $115,000.
- Those with 28 or 29 years at GM are being offered a bridge to retirement, with the company providing a monthly gross wage of $2,850 or $2,900 until qualifying for retirement.

Sphere: Related Content

Exit

GM on its way out…

GM’s bondholders have reached a deal after failing to agree on 27 bln USD in unsecured debt. GM had proposed an exchange where bondholders would receive 10% of the equity of the restructured company.
A new proposal was filed whereas bondholders would receive 10% and an option to purchase up to 15% on condition they did not oppose the government-sponsored restructuring. The US Treasury would own 72.5% and the United Auto Workers 17.5%.
The exchange offer will be open to bondholders until Saturday 5 p.m.

And the: Which company will replace GM in the indices?

Sphere: Related Content

Time to sell my 911

Not so long ago Porsche was able to squeeze the hedge fund community with an option construction. It seems this is coming back to haunt the carmaker. On Bloomberg we found an article opining that Porsche could lose some of the 17.3 bln € paper profits they made from holding VW options because they have no money to exercise them. Through these options P. is able to control 70% of Volkswagen, but now they need to cash them before they expire.
Exercising options on 20 percent of VW’s 294.9 million outstanding shares at the strike price estimated by analysts would require 5.9 billion euros, according to data compiled by Bloomberg. The 20 percent stake would have a market value of 14.1 billion euros, based on yesterday’s price.

Sphere: Related Content

No evidence - part 1

Consider this headline:
GERMAN FINANCIAL WATCHDOG BAFIN SAYS HAS ENDED SHORT-SQUEEZE PROBE INTO VOLKSWAGEN SHARES NO EVIDENCE OF WRONG DOING.

They are all the same, now aren’t they, those watchdogs.
Porsche made a 6.8 bln EUR profit from its options in Volkswagen, lifting its pretax profit to more than twice its revenue. As long no Germans were screwed in this process, Bafin can not discover anything irregular in one of the most amazing trades of the last decennium.

Sphere: Related Content

Let's buy a new car...

Big winners today are car makers. It were the European car makers which are the main outperformers in the credit markets. Yesterday the UK joined France and Germany as the latest EU member promising support for their local ailing auto industry. Does it mean we have to buy the Big Three of Detroit en masse? Or flocking to Toyota and Honda? And what about Volkswagen?
We remain careful as throwing money to an industry doesn’t mean the consumer is ready to go out and buy ‘stuff’ again.

We can ask ourselves: what sector will be next?

Airlines?

Sphere: Related Content