GM Ownership Change
“GM filed for Chapter 11 bankruptcy early Monday, marking the humbling of an American icon that once dominated the industry and setting up a high-stakes gamble for taxpayers.
Under the plan, the Obama administration will spend a bit more than $30 billion to fund the bankruptcy and in exchange receive 60% of GM’s stock, while the Canadian government will put in $9.5 billion for a 12% stake, senior administration officials said.”
As a taxpayer I’m not in favor of the “high-stakes” gamble made by the administration resulting in a 60% ownership stake in GM, while bondholders have again received the shaft. The administration has changed agreements i.e. bondholder agreements making it very unlikely that corporate bonds in GM will ever be purchased again eliminating a source of future funding. Will profits be able to carry the company and provide stockholders with a return on its investment? What do you think?
