[lbo-talk] Analyst: Game over for GM stockholders; shares fall 21%

Charles Brown charlesb at cncl.ci.detroit.mi.us
Tue Dec 23 12:01:30 PST 2008


Analyst: Game over for GM stockholders; shares fall 21%

http://www.freep.com/article/20081222/BUSINESS01/81222018/?imw=Y

By KATIE MERX FREE PRESS BUSINESS

The game is over for holders of General Motors Corp.’s existing stocks and bonds, Credit Suisse auto analyst Chris Ceraso wrote in a note to investors today.

Ceraso downgraded Credit Suisse's rating of GM from neutral to underperform and dropped its target price for the stock to $1 from $2.

The news caused many investors to dump their investment in GM.

Shares of GM fell to $3.52 today. That’s down 21.6%, or 97 cents, from Friday’s close.

“Over the next two months, as bondholders, union representatives and company management meet to hammer out concessions, we think it will become increasingly clear that the enormous sacrifice of value on the part of the union (upwards of $10 billion) and bondholders (about $24 billion) will require the complete or near-complete elimination of the existing GM equity,” Ceraso wrote.

In addition, he wrote, investors should remember that the federal government will claim up to 20% of the equity value in exchange for $13.4 billion in loans.

“We think existing equity holders will be largely, if not entirely, wiped out in the process,” Ceraso wrote.

Contact KATIE MERX at 313-222-8762 or kmerx at freepress.com.

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