November 19, 2010
AND THE MOST GALLING THING OF ALL...:
nvestors take GM stock for a joyride: The auto giant's shares gain 3.6% in their first day of trading after its $20-billion-plus IPO. (Walter Hamilton and Jerry Hirsch, 11/19/10, Los Angeles Times)
The old saying that what's good for General Motors is good for the country took on new meaning Thursday after the carmaker went public in a $20-billion-plus stock offering.General Motors Co. shares accelerated smoothly in their first day of trading, gaining 3.6% from the higher-than-expected price the company sold them for late Wednesday.
The solid debut was especially good news for the Obama administration, which is eager to show it can recoup the nearly $50 billion it plowed into the auto giant last year.
"This is just about the sweetest deal that they could have hoped for," said Sandeep Dahiya, associate finance professor at Georgetown University's McDonough School of Business. "They got a good price, they sold a lot of their shares, and they're not facing criticism that they sold out cheaply."
...everybody wins.
MORE:
Despite deal, bankruptcy for GM is ‘probable’ (AP, 5/28/09)
Under the government’s offer, bondholders would get 10 percent of the stock in a newly formed GM, the same as a proposal that they shunned earlier this week. But the new offer also gives them warrants to buy an additional 15 percent stake, possibly at a discount.That would come only if they agree to support selling GM’s assets to a new company under bankruptcy court protection.
The revised offer amounted to an ultimatum: Go along with the government auto task force’s proposal or face substantial reduction in the amount of stock and warrants they will get.
“They have sweetened the deal by adding the warrants to th e equation,” said Pete Hastings, senior analyst with Morgan Keegan & Co. “It’s enough for me to have moved from rejecting the deal and trying our luck in bankruptcy court to the side of recommending the deal.”
