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GM Asks Banks for Help on Stock Buyback Demand
General Motors Co. tells Reuters it has asked two investment bankers for advice in responding to a request to enhance stockholder value by buying back $8 billion in shares.
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General Motors Co. tells Reuters it has asked two investment bankers for advice in responding to a request to enhance stockholder value by buying back $8 billion in shares.
Harry Wilson, a former member of the U.S. auto task force that orchestrated GM's restructuring in 2009, complains that GM is sitting on a $25 billion cash trove that is likely to reach $30 billion by the end of this year. Wilson wants a seat on GM's board on behalf of four investment funds that hold a combined 2.1% stake in the carmaker.
GM argues it needs strong cash reserves in large part because of uncertain exposure to lawsuits spawned by its belated recall last year of 2.6 million cars with defective ignition switches. The company also faces claims of lost value by owners of some of the 27.8 million additional vehicles it recalled in 83 other campaigns last year.
A source tells The Wall Street Journal that GM began considering a stock buyback or dividend boost before receiving Wilson's request.
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