This question is for Daisy or anyone that thinks that they have the following figured out:
1) Is there any accurate information on how many $25, $100, and any other denomination bonds that are waiting in line for the new GM shares?
2) How many shares will be issued to Motors Liquidation to distribute to qualified debtors?
3) Will those shares go through a reverse 4 for 1 split before they are distributed?
4) If the IPO is for $133 per share as the article from the link below implies, will the new shares be worth ¼ of that?
5) Assuming that all of the “10%” of new shares that ML were issued is distributed to the bondholders, how much do you think that the shares exchanged for each of our $25 bonds will be worth, and state if you are including the value of the “15%” of warrants if exercised, minus the cost to exercise them.
The $25 bonds closed at a price of about $8 at the end of Wednesday's trading, according to FINRA. You can get their current price by going to the FINRA site, which is
and entering the CUSIPs of the $25 bonds. For example, GMS is 370442121 and GRM is 370442691.
#s 3&4, if the stock is split 4 for 1 then you will get four times as many shares [240,000,000 will be given to the cresitors]. The warrants will also be adjusted, 4 shares for $30 and 4 shares for $55.
GM S-1 filing est. the total debt to be converted to be over $37B. This means that 10 million shares will be added to the conversion or a total of 60,000,000 shares will go to the creditors.
When the final debt number is given, divide that number by 60,000,000. Then divide this number into the total amount of debt that you hold and round down.
This will give you the number of shares owed you. You can do the same for the warrants.
Here is the info I have:
1) Motors Liquidation in its latest monthly operating report mentioned $28,356,000,000 worth of bonds debt. (I assume this amount includes accrued interest until 1st June 2009). Look for those 8-K monthly reports at sec.gov.
2) To be distributed to creditors: 50 million shares (or 10% of the initial total of 500M). If you factor in the warrants, a total of 140,909,090 shares.
3) There is a rumor of stock spilt prior to IPO. Steve Rattner (ex car tzar) mentioned it during a recent interview.
4) Your question number 4 refers to stock spilt? In that case yes, there is a rumor of pre-IPO stock split.
5) Your question 5 is all about valuing the new GM. To calculate the % of recovery, this is the calculation I now use:
Total Liabilities subject to compromise (LSTC) means total claims against debtor: $32,216,370,000 (once the court has finalized its work that amount will be closer to $35B and in this case you will need to tweak the calculation for the additional shares to be distributed when claims amount reaches a certain level).
Total cost of warrants: $2,045,454,525
Liabilities + cost of warrants = approx $34,25B
Motors Liquidation has 140,909,090 shares to distribute (that includes warrants) out of total of 606,060,600 new GM shares. This is equivalent to 23.25% of market value of new GM.
At IPO day (actually at the effective date of the plan of liquidation), you will be able to calculate the market value of new GM.
Multiply the new GM market value by 23.25% (based on total 606,060,600 new GM shares) and you get the value to be distributed to creditors. You divide that amount to be distributed by the liabilities + cost of warrants (mult by 100) and you get the percentage of recovery. Maximum recovery possible is 100%. Beyond 100% recovery and something else happens.
In March 2010, dfwmcse posted an excellent article that can be useful for you as well. The link in that post to an excel sheet for more detailed calculation is still valid.
"GM has an estimated 550 million shares outstanding, and they have been valued by a government bailout watchdog at around $133.78 per share. The company would have to issue more shares before the IPO to bring the price down to the $20 to $25 range. The move, called a split, would give shareholders around five to seven new shares for every share they now own."
The article above, quotes that Whitacre sees the SP of the IPO as somewhere between $20 to $25 implies that in order to do that, they may have to do a split of 5 to 7 shares for every 1 share.
Does that mean that if they were initially going to issue apx. 550 million shares, that they may issue at least 2.5 billion shares instead?
Will the debtors get 10% of that = 250 million shares?
That doesn't change the $ amount that we wind up with, does it?
That formula is making my head spin.
Would you care to take your formula and figure out how much dollars worth of shares each $25 bond would be worth if the price of the shares were to be $133 at IPO and warrant time?
I don't have any experience with this because I never bought any bonds, only stocks.
I don't think Wall Street can legally exchange your bonds for something else, UNLESS you agree to exchange your bonds for something else. Chapter 11 is NOT a dictatorship. It is a bargaining forum. The parties must AGREE on a settlement.
They can make you an offer. But if you DO refuse the deal, then, the bonds you have may stop trading because the short sellers REFUSE to buy them back at a higher price. If stocks and bonds stop trading then the broker may remove them from your account and put them in a "depository".
Will the short sellers decide to buy the shorted bonds back at a later time? I don't know. If the short sellers don't buy back the securities they sold and din't own, they lose money. If the buyers of the shorted securities don't sell their securities back to the short sellers, the buyers lose money.
The short sellers and the short buyers may BOTH decide to commit suicide. They both lose. "If I'm going down, you're going with me". I've heard that before.
That's my interpretation of how it works.