Mr Cooper Group Inc (COOP)

[Howard Hughes]

Monday, June 01, 2009
Nothing for GM Common Stockholders


To no one’s surprise, General Motors Corp. filed for Chapter 11 bankruptcy on Monday. According to published reports, the largest U.S. automaker will issue new stock to the company’s retiree health care trust, the Voluntary Employees' Beneficiary Association (VEBA), totaling 17.5 percent of the equity in the new GM (and warrants to purchase another 2.5 percent). GM also has agreed to give the governments of Canada and Ontario a stake of about 12 percent. The U.S. Treasury and current bondholders will own around 60 percent and 10 percent, respectively. Add the equity shares up and it equals zero for existing common shareholders. Why is the stock selling for 75 cents a share? “Hope springs eternal in the human breast,” said the English poet Alexander Pope.

If it happened to GM stockholders, why will Washington Mutual stockholders fare any better?

Do you remember what the existing GM shareholders received in the settlement? And, what they got in the "new" GM? Zero..............their shares were worthless.

Unfortunately, the precedent has been set.