GM to convert preferred stock shares to common stock

November 27, 2013 at 1:13 pm
GM to convert preferred stock shares to common stock

Melissa Burden
The Detroit News

General Motors Co. said Wednesday that it will convert all of its Series B mandatory convertible junior preferred shares of stock into shares of common stock, effective Dec. 1.

The company said about 100 million shares of preferred stock, which were traded on the open market, will convert automatically to 1.3736 shares of common stock. The company will pay shareholders cash for the fractional stock, said GM spokesman Tom Henderson.

The move should save the Detroit automaker money, as dividends on the Series B preferred stock cost the company $59.4 million quarterly and $237.5 million annually.

GM does not pay a dividend on its common stock, though analysts believe the automaker may elect to once the U.S. government exits ownership of the company, expected by year’s end.

Henderson said the stock conversion will add about 137 million new shares of common stock and that GM could have up to 1.523 billion shares of common stock outstanding following the transaction. Just how much it will have will depend on the payout of fractional shares.

Earlier this year, GM bought back 120 million preferred shares of stock from the UAW Retiree Medical Benefits Trust (UAW VEBA).

mburden@detroitnews.com

From The Detroit News: http://www.detroitnews.com/article/20131127/AUTO0103/311270081#ixzz2lt6jgd46

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