Municipal Bond Forum
Specifics on GM bonds not yet known
Q
Thank you for the GM article, but I still do not understand what you mean when you say bondholders “will receive 10% equity in the new GM along with warrants for an additional 15%.” If I own 100 of the 9.40% bonds, how many shares of stock and warrants will I receive?
A
James A. Klotz responds:
I wish we could be more specific as to the precise number of shares and warrants to be received for each 1,000 in face amount of bonds owned by bondholders. Unfortunately, this information has not been forthcoming.
The point of our article, however, was that the outstanding bonds will track the value of the stock in proximity to the potential conversion, both today and at the time of the conversion.
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