GM common stock is currently selling close to $39 a share as speculators are looking for either a stock buyback program or a dividend for the first time on common since the IPO.
General Motors Co. (NYSE: GM) will convert all of the outstanding shares of its 4.75% Series B preferred stock to shares of GM common on 1 December 2013 as set out under the terms of its IPO of November of 2010. On this mandatory conversion date each share of preferred will automatically change into 1.3736 shares of common stock unless previously exchanged and dividends will cease, saving GM $59 million each quarter. (GM Declares Dividend on Series B Preferred Stock) No fractional shares will be issued. Instead, GM will pay cash to keep its share count whole.
With the U.S. Treasury selling its remaining GM shares by the end of the year, the pressure is now on a profitable GM to start paying dividends on common, which it has never done, or buy back shares. On the last Q3 Earnings call with reporters, CEO Dan Akerson, a member of the GM Board where these decisions reside said, “We understand what we’re here for and wanting to return money to our shareholders and that will be a continuing thing not only this quarter but the next year and the year after.” (Chrysler Group Up, General Motors Down in Q3 Earnings
While it will take about 100 million shares of common to effect the swap, shares of Preferred were previously included as eligible dilutive securities in the Company’s calculation of share count. Upon conversion, the newly issued shares of GM Common Stock will be included in its basic share count.
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
