GM Shares Fall Below $1 as Deadline Approaches
Shares of General Motors have fallen below $1 for the first time in 76
years as a Chapter 11 bankruptcy filing for the automaker appears
GM [GM 0.8968 -0.2232 (-19.93%) ] shares lost more than 22
percent to fall as low as 87 cents in morning trading on Friday. It was
the stock's lowest trade since April 18, 1933.
The symbolic decline comes just days away from a government-imposed
restructuring deadline of June 1. The company is expected to file for
Chapter 11 bankruptcy protection by then, leaving shareholders virtually
On Thursday, the automaker offered a new debt-for-equity proposal to its
bondholders. The deal would give the government a 72.5 percent stake in
the company but made no mention of existing shareholders.
The Obama administration estimates that a General Motors bankruptcy
would take at least 60 to 90 days and perhaps longer to complete, a
senior official said Thursday.
The official, who spoke on the condition of anonymity because he was not
authorized to discuss the matter publicly, would not confirm a specific
bankruptcy scenario, but the government's deadline for any filing is on
President Barack Obama is expected to discuss the automaker's
restructuring at that time, the White House said.
On April 30, Obama announced that Chrysler was seeking Chapter 11
protection. Chrysler, GM's smaller rival, is on the verge of stepping
out of court protection.
GM and Chrysler are operating under the direction of a White
House/Treasury Department task force, which has provided more than $36
billion in bailout assistance to the automakers and their affiliated
The government's goal for GM is to eventually return it to
profitability, allowing it to eventually sell its shares. But the risks
for taxpayers are daunting, with U.S. auto sales near their lowest level
in 27 years.
"We will come out of this rid of some of the historic legacy costs that
have been dragging us down for the last 20 years or so," GM Vice
Chairman Bob Lutz said Thursday at an Automotive Press Association
luncheon in Detroit. "We will come out of it with an all new focus on