I just don't get this at all. After an hour on the internet trying to figure out how this transaction went down, I am more confused than when I started. Here is how I see it:
GM is stating on their web site that the stock offerred is an PO (not IPO), which means that GM sold authorized but not distributed new stock. The strike price was $33. The money would accrue to GM and there would be more shares outstanding. No mention of what GM will do with the money. (They also appear to have sold some preferred, but I have heard nothing of that from other than the GM website)
If this is true, then the government would get no money from the sale of the stock, as none of theirs would have been sold. The ownership position would change, but hopefully the value of the equity position should not change due to the large cash influx and related in assets, or reduction of liabilities.
If the government offered some of their stock for sale at a strike price of $33, then the money would accrue to the government, but the issue would be a straight sale, not a PO.
If the government sold their stock, then their voting and ownership position would change the amount of their reduction of stock, but total shares outstanding would remain the same. Hopefully, the equity position would remain the same or increase
If GM sold the stock, then the government would retain the same amount of stock as previous, and their position would be diluted in terms of ownership. However, this would also dilute the ownership position of the UAW. I have heard nothing of this.
The other thing I cannot find is the commission paid to the two firms handling the transaction. If, say, I sold my shares of stock to Al, there would be two rather small commissions involved. I'm betting that JP Morgan and Morgan Stanley, the two houses involved, are getting more than two commissions.
I've got to be missing or not understanding something. Can somebody help me?
