After Going Bankrupt On June 1’st 2009, General Motors Raises More Than $20.1 Billion In New Initial Offering

Posted By on November 17, 2010

It all sounds good but not so fast……GM’s owners, including the U.S. Treasury, sold at least $15.8 billion of common shares at $33 each, making it the second-largest U.S. Initial Public Offering (IPO) on record according to data compiled by Bloomberg.  GM  received $49.5 billion in a taxpayer bailout just last year. The Treasury, which is taking a loss on its portion of the sale, will break even only if the shares climb more than 60 percent, Bloomberg data shows.

“GM in the past wasn’t well positioned in the auto industry, but costs are now down and their products are being well-received.”  But let’s look at one other important fact.  Much of the GM bond debt became equity because of the bankruptcy.  Therefore the amount of interest expense is dynamicly smaller and this huge interest savings now trickles to the bottom line.

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