GM IPO
Re: GM IPO
What?! You don't like investors paying back the government so they can turn around and spend even more?
You must not understand Obamanomics.
You must not understand Obamanomics.
"A government big enough to give you everything you want, is strong enough to take everything you have." Thomas Jefferson
Re: GM IPO
Screw contractual agreements, screw the bond holders.......Screw GM, I won't be buying this stk.
What a week for General Motors. The failed automaker charged back onto the scene after being delisted by the NYSE a year and a half ago with an IPO price that just kept going up and up, topping it all off by closing its first day of trading up 3.6% to $34.19.
The offering's total value should be about $23.2 billion, including $18.2 billion from the sale of common stock and $5 billion from selling preferred stock. A big beneficiary of the offering is the federal government, which should take in about $13.6 billion as it sells the majority of its shares, reducing its ownership in the company from 61% to 33%.
It's a win all around, largely because the government made sure it was by simply disregarding years of precedent in bankruptcy and taxation law.
Yup, that's right. Unlike, say -- oh, any other company that declares bankruptcy -- the government has allowed the newly created GM to assume the benefit of tax losses from the old GM. As Jeffrey Coyne, senior lecturing fellow at the Duke University School of Law and a management consultant who specializes in reorganizing troubled companies, told TheStreet in June 2009, "You can't form new GM, which has never transacted business before, and sell the assets (of existing GM) and then sell the net tax benefit to the new company," Coyne said. "And as far as I can tell, the NOL is not a saleable asset." An NOL, or net operating loss, ,can be used as a tax loss carry forward, an accounting technique that allows it to be applied to future profits to reduce tax liability.
Not surprisingly, the government employed some slick legalese to work around such details that, as the WSJ put it in a Nov. 3 article, put a "final gift in GM's trunk." And now, according to federal filings, GM won't have to pay $45.4 billion in taxes on future profits thanks to the carry forward.
So that's one failed company, bailed out by taxpayer money, and then excused from paying taxes for who knows how many years. How do we get into this car-making business again?
What a week for General Motors. The failed automaker charged back onto the scene after being delisted by the NYSE a year and a half ago with an IPO price that just kept going up and up, topping it all off by closing its first day of trading up 3.6% to $34.19.
The offering's total value should be about $23.2 billion, including $18.2 billion from the sale of common stock and $5 billion from selling preferred stock. A big beneficiary of the offering is the federal government, which should take in about $13.6 billion as it sells the majority of its shares, reducing its ownership in the company from 61% to 33%.
It's a win all around, largely because the government made sure it was by simply disregarding years of precedent in bankruptcy and taxation law.
Yup, that's right. Unlike, say -- oh, any other company that declares bankruptcy -- the government has allowed the newly created GM to assume the benefit of tax losses from the old GM. As Jeffrey Coyne, senior lecturing fellow at the Duke University School of Law and a management consultant who specializes in reorganizing troubled companies, told TheStreet in June 2009, "You can't form new GM, which has never transacted business before, and sell the assets (of existing GM) and then sell the net tax benefit to the new company," Coyne said. "And as far as I can tell, the NOL is not a saleable asset." An NOL, or net operating loss, ,can be used as a tax loss carry forward, an accounting technique that allows it to be applied to future profits to reduce tax liability.
Not surprisingly, the government employed some slick legalese to work around such details that, as the WSJ put it in a Nov. 3 article, put a "final gift in GM's trunk." And now, according to federal filings, GM won't have to pay $45.4 billion in taxes on future profits thanks to the carry forward.
So that's one failed company, bailed out by taxpayer money, and then excused from paying taxes for who knows how many years. How do we get into this car-making business again?