Re: GM is not going bankrupt
[ QUOTE ]
I've said it before and I'll say it again - GM is not going bankrupt thus no restructuring. If they came close, the government would bail them out. Do you think Kerkorian would be buying stock if he thought they were going under? They need to sell some non-core assets like GMAC (non GM exposure), shake up management and start building cars that people will buy, not the junk they have been pushing on middle America for the past 30 years.
[/ QUOTE ]
So, do you think Kerkorian is buying the stock because he believes the Government will bail out GM...or because GM builds "junk" cars? When the Government bails out GM will they pay Kerkorian $31+ per share for his stock?
Why do you suppose Kerkorian needed to make a tender offer to acquire the stock? The stock is very liquid - he could have bought it in the open market at lower prices than $31 per share. Perhaps Kerkorian wanted everyone to know that he was buying stock? Perhaps Kerkorian already had a stock position and he knew a public tender offer would set off a a short covering rally and he would profit on his initial stock position.
Or perhaps Kerkorian thinks he can dividend GM's liquid assets (cash and GMAC) to shareholders and leave creditors holding the bag (the worthless auto division.) This sort of value transfer (bondholders to stockholders) is sometimes possible given the weak indenture protection in most investment grade bonds (weak restricted payment protection).
The government may be forced to backstop a portion of GM's pension obligation in a bankruptcy (via the PBGC). However, I can't imagine an investor "bailout" (which violates World Trade Organization rules, btw).
|