GM has once gain voiced its full and vigorous condemnation of what appears to be a typical Wall Street investment firm raid by Greenlight to make money with potentially, perhaps certainly, ruinous consequences for the survival of the business and jobs.
“Greenlight’s candidates were nominated specifically to advance Greenlight’s dual-class stock plan, which GM’s Board views as high-risk and detrimental to the long-term best interests of GM and its shareholders, and do not have the depth or breadth of relevant experience, at the same level of complexity, that our directors bring. Their experience is already fully represented by the current GM Board members,” according to GM’s latest statement. (GM Reports 2017 Q1 Net Income of $2.6 Billion – up +33.5%)
“GM believes that voting for any of the Greenlight candidates represents an endorsement of Greenlight’s flawed plan, and the presence of any of the Greenlight candidates on the Board would undermine our ability to move forward with focus and clarity on the right strategic imperatives that are critical as we navigate this period of unprecedented industry change…
GM claims it presented information accurately and responsibly; rating agencies had complete information regarding the proposal when they issued their opinions and have not changed their opinions after meeting with Greenlight. Greenlight is silent on this aspect of the deal, which appears dead on arrival. Moody’s and S&P said Greenlight’s proposal was “credit negative.” Greenlight – currently under performing the market itself – owns 3.66% of GM shares, orvmore than 13 million.
“Greenlight’s claims regarding GM’s engagement with the rating agencies relative to Greenlight’s Dividend Shares proposal are baseless and represent what we view as an irresponsible attempt to divert attention away from the fact that Greenlight’s proposal is a high-risk experiment in financial engineering that is not in the best interests of GM shareholders, would result in a downgrade of GM’s credit rating, and would not increase value for shareholders,” said GM.
- GM presented Greenlight’s Dividend Share idea to the rating agencies fully and fairly.
- Greenlight’s definitive proxy makes clear that Greenlight has met with two of the rating agencies to make its case directly and the rating agencies’ views have not changed. The
- GM advisors discussed potential impact on industrial investment grade issuer with two agencies
- Provided illustrative impact of transaction proposed by Greenlight on net income / EPS, cash flow and balance sheet
- Stress tested structural alternatives to try to achieve maximum equity treatment
- Discussed three potential structures on a formal, named basis: (1) preferred stock, (2) dual-class of common – the current Greenlight proposal – and (3) dual-class of common with alternative features including upside participation and full voting rights
- GM provided each agency the specific summary of terms for each structure that Greenlight shared with GM
- Where specifically requested, provided a standard form term sheet representing the terms Greenlight provided to GM
- Agencies have had the benefit of Greenlight public presentation, exact terms Greenlight provided to GM, as well as Greenlight’s proxy materials
- Greenlight has also met with two of the rating agencies to make its case directly since making its proposal public
- The Dividend Shares term sheet that Greenlight originally provided GM was not in standard form and was incomplete
- In its named discussions with the rating agencies, GM provided a summary of the terms of the proposal and, when specifically requested, a standard form term sheet which was based on Greenlight’s original term sheet (see annotated term sheet at: https://www.gmproxy.com)
Despite these actions GM asserts that the rating agencies’ views have not changed since their initial public statements, which were issued after Greenlight filed its public presentation. GM says – with justification in AutoInformed’s view – that it is clear from the public statements made by the rating agencies that they understand all aspects of the proposal and that it would represent a credit negative if implemented. “Any suggestion to the contrary is false,” said GM.
The Board’s conclusions and additional materials addressing Greenlight’s most recent assertions are available on GM’s website in a dedicated section where shareholders can access all related information: http://www.gmproxy.com.