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No, I was bidding the same; you just just better connections :)
Reason for the discount - Grey Market.
"...Best Execution of orders is difficult". - PinkSheets
Got that one right. It took me a week to get my fill. I was the one buying today at $1.75 (7 percent of par).
Marayatano is correct.
This a great way to effectively buy GMGM.GF with a margin of safety via the 40 percent discount.
Investors could sell once the discount evaporates.
A classic arbitrage opportunity (in theory).
Buy 1,000 shares of CCYPQ representing $25,000 par amount @$1.80. Value = $1,800.00
Sell short 25 bonds of GMGM.GF bonds representing $25,000 short @11.95. Value = $2,987.50
Deliver stock and warrants received in Ch 11 reorg to close out short position.
Profit = $1,107.50 with ZERO risk.
[Commissions excluded for illustration purposes]
Making this a reality is difficult for retail investors. Buying CCYPQ at a "fair price" may be difficult. I tried last week to get fills from $1.60 to $1.80. Needless to say, it would get easier as CCYPQ approaches $2 or the GMGM.GF decline to 10.
GM Dissident Bondholders Pick Patton Boggs over White & Case
By Alison Frankel
June 15, 2009
When we picked Thomas Lauria and Glen Kurtz of White & Case as our Litigators of the Week last week, it was partly because the issues they'd raised in protesting Chrysler's government-backed deal with Fiat all the way to the U.S. Supreme Court promise to rear up again in General Motors's bankruptcy--and Lauria and Kurtz were expected to play the same spoilers' role in GM's Chapter 11 as they did in Chrysler's.
"I think we can be assured that GM will rely heavily on the blueprint that was used in the Chrysler case," Kurtz told us. "One of the e-mails that was produced in the Chrysler litigation specifically noted that Treasury was viewing Chrysler as a guinea pig...for GM." And just as the rebellious Indiana pension funds that opposed Chrysler's reorganization plan relied on the pit bull tactics of Lauria and Kurtz, so too were GM's bondholders expected to engage the White & Case duo to fight their battle.
But when GM bondholders protest the carmaker's plan to emerge from Chapter 11, it won't be Lauria and Kurtz doing the objecting. Brian Baxter at The Am Law Daily reported Monday that bondholders have hired Patton Boggs bankruptcy chair Michael Richman to take their case instead.
The bondholders did consider Lauria, according to Bloomberg, but picked Richman. "[W]e just thought [Richman] was a better fit for us," said dissident bondholder Mark Modica, a 48-year-old employee at a Saturn dealership. "It was a difficult decision."
Richman told The Am Law Daily he's already trying to differentiate his strategy from that of Lauria in the Chrysler bankruptcy. "We don't want to delay or prevent the transfer of assets from 'old GM' to 'new GM,'" Richman said. "Our issue is not with that reorganization plan, it's with the effort by the parties who put the plan together to dictate the capital structure and ownership of the company outside of a bankruptcy plan."
Richman told Baxter that he doesn't anticipate his clients' objections proceeding all the way to the Supreme Court. "I have a sense of cautious optimism that the bankruptcy court will say, 'Follow the law,'" Richman said. "And if I'm right about that, I don't think we'll see this going to appellate courts."
http://www.law.com/jsp/tal/digestTAL.jsp?id=1202431485864&GM_Dissident_Bondholders_Pick_Patton_Boggs_over_White__Case
Bondholders want more than 10% (including their warrants). This will be a windfall they get more than 10%.
http://gmcourtdocs.gardencitygroup.com/pdflib/1969_50026.pdf
Check out the bottom of page 7 and top of page 8 for the breakdown of the NEW GM.
You might want to read the whole document if you want. You can get what is going on from the Pleading and is pretty informative.
If the Bondholders (the ones who filed this) prevail, then there is some good upside in whch bondholders may receive more than the 10% of the new GM including their warrants.
ALSO CORRECTION FROM MY POST: It should be $11.95 of a $100 GM Bond to make it at $0.1195 cents on the dollar.
I have Etrade also. CCYPQ trades like a stock. Since you know about WAHUQ, then basically it is the same concept, except the underlying bonds which backs the Trust is senior GM Bonds.
So the commission will be $9.99.
Bonds, when I bought was more than $25 (in total). It think it was more like $200 plus. I guess it depends on how many bonds you buy (face value wise).
Hope this answers your question.
For the who PM'ed me. To summarize, CCYPQ is a Trust originating from Lehman Brothers (but NOT connected to Lehman Brothers Bankruptcy).
This Trust bought GM Senior Bonds. The specific bond is GMGM.GF / CUSIP 370442AV7. This Bond closed at $11.95 on Friday. This means that the Bond is trading at $11.95 per $1,000 bond OR .1195 cents on the dollar.
Each share of CCYPQ has a par value $25 per share. CCYPQ is trading at $1.50 (closing price of Friday). Since the GM Bond is trading at .1195 cents on the dollar, then CCYPQ shuld be trading at .1195 on the dollar.
$25 (par value of CCYPQ) x .1195 (based on GM Bond that closed at .1195 cents on the dollar) = $2.9875 (This is the price CCYPQ should be trading at since it has to match the GM Bond).
As you can see, CCYPQ is very undervalued.
Under the GM Plan, Bond Holder are supposed to 10% (Plus 15% in warrants) of the new GM.
I do not know the price per share of the new GM since I believe it is going to be a private company BUT will have an IPO to the public in the near future.
In my opinion, this is a great investment, especially since you are buying in at for example: At $1.50 per share is like buy GM bonds at .06 on the dollars. ($1.50 divided by $25 = .06 cents on the dollar WHILE GM Bonds are at .1195 cents on the dollar).
Hope that answers your questions.
Hello Marayatano, I'm just starting to look into this. I'm not real familar with any of this. I was wondering what the commision on this are like. I'm inclined to think it's more like a bond buy than like a stock trade. I use e-trade and for the stocks $9.99/trade and I've only baught 1 bond ever and it cost me $25.
GMGM.GF up 1.09 to 11.95 on three trades, $115,000 (6/19/09)
Issue: GMGM.GF Description: General Motors Corporation Coupon Rate: 8.100 Maturity Date: 06/15/2024
Execution
Date Time Status Quantity Price Yield Comm. Modifier 2nd Modifier Special As Of Reporting Party Side
06/19/2009 15:08:59 T 100000 11.950 0.000 N @ S
06/19/2009 14:29:00 T 5000 10.750 0.000 N @ B
06/19/2009 10:13:55 T 10000 10.500 0.000 N @ B
Today's GMGM.GF GENERAL MOTORS CORPORATION 8.10% 06/15/2024 closed at $11.95.
Bondholders, unions object to GM asset sale
Group of bondholders, trio of unions file objections to General Motors' bankruptcy sale plan
NEW YORK (AP) -- A group of General Motors Corp. bondholders and some of the automaker's labor unions filed objections Friday to the company's plan to sell its assets to a new company that can emerge from bankruptcy protection.
Their opposition, along with additional objections filed by consumer groups, a handful of states and cities, and individual retirees, shareholders and bondholders, threatens to put the brakes on what has so far been a speedy trip through the Chapter 11 process.
The Unofficial Committee of Family & Dissident GM Bondholders claim they are being treated unfairly compared with the automaker's other stakeholders and deserve more than the 10 percent stake in the new company that they would receive if the sale goes through.
In its motion, the bondholders group accused GM and the U.S. government of unjustly pushing the case through the bankruptcy process at the expense of the bondholders and dividing the new company's assets "among a few select favored classes."
"GM's bondholders appear to be the most disfavored and discriminated class in the scheme," the group wrote, pointing to the 17.5 percent stake the United Auto Workers union is slated to get under the sale.
The group claims to represent about 1,500 bondholders with holdings worth more than $400 million. It's also asking the court to grant it permission to form a formal committee that would be able to negotiate with GM separately from larger bank and investment firm bondholders. A hearing on that request is scheduled for Tuesday.
GM spokeswoman Renee Rashid-Merem declined to comment on the group's objection, saying that the company doesn't discuss specific claims or possible outcomes that will be determined by the bankruptcy court.
As part of GM's restructuring plan, the automaker wants to sell the bulk of its assets to a new company in which the U.S. government will take a 60 percent ownership stake. The Canadian government would get 12.5 percent of the new GM, with the UAW taking a 17.5 percent share and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.
The support of bondholders is seen as a key step toward speeding the bankruptcy process and allowing GM to meet its goal of emerging from court oversight in 60 to 90 days.
The day before GM's June 1 bankruptcy protection filing, a group of ad hoc institutional bondholders said that 54 percent of the automaker's bondholders had agreed to exchange their shares of automaker's $27 billion in unsecured bonds for the 10 percent stake and warrants to purchase a greater stake in the new company later.
Chrysler LLC also tried to hammer out a deal in the days leading to its April 30 Chapter 11 filing, but it faced resistance from debtholders representing a fraction of its $6.9 billion in secured debt.
That group objected to Chrysler's plan to sell the bulk of its assets to Italy's Fiat Group SpA, and took the case all the way to the U.S. Supreme Court before the sale ultimately went through. Attorneys for consumer groups and people with product liability lawsuits against Chrysler also appealed the sale to the high court.
Meanwhile, the IUE-CWA, United Steelworkers and International Union of Operating Engineers claimed Friday that the GM sale will ultimately take away the health care benefits of their 50,000 retirees.
Before it filed for bankruptcy protection, GM reached a deal to give the UAW a stake in the new company to help fund retiree heath care benefits, but no such agreement has been reached with the other unions.
"If GM succeeds in leaving behind these union-represented retirees and dependents, they will be left with only an unsecured claim against old GM for more than $3 billion in retiree health care and hundreds of millions more for retirement life insurance," the unions said in their objection.
Rashid-Merem said discussions related to the non-UAW health care benefits are ongoing, and the company hopes to reach final decisions about their future soon.
A hearing on the sale of GM's assets to the new government-led entity is scheduled for June 30.
http://finance.yahoo.com/news/Bondholders-unions-object-to-apf-1291118704.html?x=0&sec=topStories&pos=1&asset=&ccode=
GM plans comeback a month early
By Bernard Simon in Toronto
Published: June 18 2009 22:27 | Last updated: June 18 2009 22:27
General Motors is preparing to relaunch itself as a leaner company by mid-July, a month earlier than envisaged when the Detroit carmaker filed for bankruptcy protection on June 1.
The judge overseeing GM’s Chapter 11 case has set Friday as the deadline for objections to its restructuring plan.
Barring a last-minute surprise, GM and its advisers are confident that none of the roughly 500 objections submitted so far will derail the timetable, under which the court is due to consider the sale of most of the carmaker’s assets to a new entity on June 30.
“It really is remarkably quiet,” one person familiar with the process said. According to another, the company is drawing up plans to reveal its new board of directors and possibly a raft of senior management changes around the middle of July.
Most of the objections raised so far relate to suppliers’ concerns about the amount and timing of payments by the “new” GM under contracts taken on by the existing company. Assets of the “old” GM will remain in Chapter 11 to be sold or wound down for the benefit of creditors.
Possible stumbling blocks include a potential backlash from unsecured creditors as well as dissidents among holders of $27bn in unsecured bonds. A small group of dissident bondholders, holding less than 1 per cent of the securities, has asked the court to allow them to form a committee which would give them a formal voice in the proceedings.
The official committee of unsecured creditors met Fritz Henderson, GM’s chief executive, last week. Tom Mayer, the committee’s legal adviser, declined to comment on its plans.
At the time GM filed for court protection, holders of about 54 per cent of the bonds had approved its offer of a 10 per cent equity stake and warrants for another 15 per cent. GM is restructuring under a seldom used provision of the US bankruptcy code: a normal process would require approval of two-thirds of the securities. The US government is set to emerge as GM’s biggest shareholder, with a 60 per cent stake.
Eric Ivester, a restructuring specialist at law firm Skadden Arps, said: “It’s certainly unique when the government is both the acquirer and the provider of debtor-in-possession financing. [The GM case] is on a rapid track. Prospects for approval appear good.”
GM has taken steps to assuage the two groups – secured creditors and dealers – that worked hardest to derail Chrysler’s recent 41-day journey through bankruptcy court. GM has pledged to repay secured claims in full.
Although GM has told 1,100 of its 6,000 dealers that their sales and service franchises will not be renewed, it has taken a more conciliatory stance than Chrysler.
Robert Gerber, the judge hearing GM’s case, has a debtor-friendly reputation. If all goes to plan, the hearing will take a few days.
Copyright The Financial Times Limited 2009
http://www.ft.com/cms/s/0/55c48d2e-5c34-11de-aea3-00144feabdc0.html?referrer_id=yahoofinance&ft_ref=yahoo1&segid=03058&nclick_check=1
There may be a possibility that bondholders may want more than 10% (including their 15% warrants). It would be icing on the cake.
SIDE NOTE/SUGGESTION: Name of Board is: Lehman ABS 7.375% CorTS GM
If you want to change it to: Lehman ABS 7.375% CorTS GM General Motors
So when someone does a search for General Motors, it will show up. I have tried GM, it goes to General Motors Board. Tried Lehman, it comes up along with the other Lehmans. General motors, nothing showed up.
Heya. Sweet, marked. Will be picking this up as funds become avilable. Very nice find !
"Thank you for the insight on the other ABS trusts.
If the "Q" was added on later because of GM, then assets could flow to holders upon resolution of GMGMQ."
Yes, exactly my point. GM is to be resolved within 60/90 days. That is a very fast turn around since our government is involved.
I truly think this is a major diamond in the rough soon to be found. I was just fortunate enough to find CCYPQ while researching GM senior bonds and trading the very risky common shares. Read the prospectus in parts and could not believe what I was reading, then found the exact GM senior bond that was the underlying security within the Trust.
I only brought this to you attention because I knew you would appreciate something like this -- a real investment opportunity.
Hopefully you will get your fill. Still trying to get the rest of my fill.
Cheers!
Wow!
Thank you for the insight on the other ABS trusts.
If the "Q" was added on later because of GM, then assets could flow to holders upon resolution of GMGMQ.
No fills here.
I have removed myself from watching other boards because it is too early in the process for many. With all of the BK's today, some enterprising investors will become wealthy. I have never seen it like this!
Thanks for setting up the Board. I would have done it myself, but I personally do not have the time.
In regards to your PM:
My understanding is that even though it carries the Lehman name, it is only the name and not really connected to the Lehman Bros. bankruptcy, but is connected to the GM BK.
See below for similar type Trusts set up by Lehman that does not carry the "Q" :
JZL Lehman ABS Corp Bkd Trust Certs 2003-16, 6.25% Boeing Co. NYSE
JZK Lehman ABS Corp Bkd Trust Certs 2003-17, 7.00% Sprint Capital NYSE
JZJ Lehman ABS Corp Bkd Trust Certs 2003-18, 7.125% Variable AT&T Corp. NYSE
JZI* Lehman ABS Corp Bkd Trust Certs 2003-19, 6.00% GE Global Insur NYSE
JZH Lehman ABS Corp Bkd Trust Certs 2003-20, 6.00% Prudential Financial NYSE
JZG* Lehman ABS Corp Bkd Trust Certs 2004-01, 6.20% Verizon NY Debentures NYSE
JZE Lehman ABS Corp Bkd Trust Certs 2004-02, 6.75% Variable AT&T Notes NYSE
JZD* Lehman ABS Corp Bkd Trust Certs 2004-03, Floating Rate DaimlerChrysler NYSE
JZC Lehman ABS Corp Bkd Trust Certs 2004-04, 6.00% Goldman Sachs Cap I NYSE
JZB* Lehman ABS Corp Bkd Trust Certs 2004-05, Floating Rate Verizon NY Deb NYSE
JBK Lehman ABS Corp Bkd Trust Certs 2004-06, Floating Rate Goldman Sachs Cap I NYSE
If I remember correctly, when GM went BK Ch 11, so did the CCYPQ (not when Lehman Bros. when BK). The other Trusts by Lehman Bros. w/ a similar set up like Gm Bonds does not have the "Q".
Without me looking through the prospectus, imo, Lehman only set up the Trust and making the speard between the GM Bond was actually paying and paying the Trust holders about 1% less.
I myself have been trying to get my complete fill. Only getting partials.
Cheers.
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Lehman ABS Corp., 7.375% Corporate Backed Trust Certificates, Series 2001-8, Class A-1
The trust is comprised of $32,575,000 principal amount of General Motors 8.10% Debentures due 6/14/2024 (MTLQ.GF / CUSIP 370442AV7). The underlying securities will be exchanged for equity securities in New GM. Debtholders are expected to receive 10 percent of the common stock in New GM and warrants to buy another 15 percent. GM is expected to be a public company within 6 to 18 months.
The issue price was $25. Each certificate represents a 1/40 interest in the underlying $1,000 debenture. The prices of the CCYPQ and MTLQ.GF should be highly correlated. For example, CCYPQ should trade near $2.50 if the underlying security, MTLQ.GF trades at 10 or $100 per $1000. The trust will receive New GM securities, which will be sold and the proceeds distributed to certificate holders. CCYPQ may trade at a slight discount since the trustee will be eligible to receive reimbursement of Extraordinary Expenses prior to any distribution to certificate holders. Extraordinary Expenses will arise from efforts to protect certificateholders.
This is a thinly-traded issue. There were only 1,303,000 CorTS certificates issued. There are no market makers in this security. It is not listed, traded or quoted on any stock exchange, the OTCBB or the Pink Sheets. Trades in grey market stocks are reported by broker-dealers to their Self Regulatory Organization (SRO) and the SRO distributes the trade data to market data vendors and financial websites so investors can track price and volume. Since grey market securities are not traded or quoted on an exchange or interdealer quotation system, investor's bids and offers are not collected in a central spot so market transparency is diminished and Best Execution of orders is difficult.
Three Month Chart:
GM Filing Date Forward Chart:
To obtain pricing data for MTLQ.GF / CUSIP:370442AV7, click below:
http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=MzcwNDQyQVY3
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