GM Fund Manager Sells All Employee Shares on Bankruptcy Risk
State Street sold 75 million shares, or about 12.4 percent of GM outstanding common stock, between March 31 and yesterday, Julie Gibson, a GM spokeswoman, said yesterday in an interview. It held most of those shares in a 401(k) fund for 29,800 employees and retirees. The fund is one of several options available in the GM employee-retirement savings plan.
The investment company held a total of 103 million GM shares at the end of the year, according to Bloomberg data.
State Street notified employee investors of the move in a letter, saying that the trustee is authorized to sell the shares if there is serious concern about GM?s viability as a going concern or if there is no short-term possibility of recouping substantial proceeds from the sale of the stock in bankruptcy.
?State Street made the determination that this standard had been met due to the economic climate and the circumstances surrounding GM?s business,? it said in the letter, which was included in a filing with the U.S. Securities and Exchange Commission.
The sell-off probably concluded yesterday, State Street said in the letter.
Hannah Grove, a spokeswoman for parent company State Street Corp., didn?t immediately respond to telephone and e-mail messages seeking comment.
GM fell 92 percent over the last year and is operating with $13.4 billion in U.S. loans. President Barack Obama has given the Detroit-based automaker until June 1 to restructure its debts or file for bankruptcy court protection from creditors.
According to the filing, the funds from the sale were transferred to short-term fixed income investments. Plan participants have until May 29 to redirect their stake in the fund or the money will be moved to the employees? default funds.