Wednesday, May 13, 2009

Officials at GM Sell Their Shares

The Wall Street Journal - Seven General Motors officials dumped all of the stock they directly own in the auto maker as it faces scenarios that would either dilute or wipe out common shareholders.

On Monday, the same day Chief Executive Fritz Henderson said the company still could avoid seeking bankruptcy protection, six insiders, but not Mr. Henderson, disclosed selling an aggregate 204,711 shares at prices from $1.45 to $1.61 a share, or $323,657 in total.

In 4 p.m. New York Stock Exchange composite trading Tuesday, GM's shares fell 20%, or 29 cents, to $1.15, its lowest close in 76 years, on April 27, 1933.

Vice Chairman Robert A. Lutz, who moved into an advisory role last month and will retire by the end of the year, had the largest transaction, selling 81,360 shares for $130,990.

The recent sales followed a disclosure last month that an independent fiduciary, citing the possibility of a GM bankruptcy, sold all of the GM shares in two employee-benefit plans. Also last month, Maureen Kempston Darkes, the president of GM Latin America, Africa and Middle East, disposed of 18,471 shares for $33,433.

"These particular executives made the decision to sell their shares in advance of what we know is going to be happening over the next few weeks," GM spokeswoman Julie Gibson said.

GM is facing a June 1 restructuring deadline from the government and could file for Chapter 11 bankruptcy protection if it is unable to complete a debt-for-equity exchange for $27 billion in unsecured bonds.

Stephen J. Lubben, a bankruptcy-law professor at Seton Hall University School of Law in Newark, N.J., said bankruptcy is the likeliest outcome for GM and would render the shares practically worthless. Even if the exchange offer were to succeed, investors would be left with shares that won't be worth much, he said.

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