General Motors' annual shareholder meeting is being held today in Detroit and shareholders are being asked to vote on a recapitalization proposal put forth by David Einhorn's Greenlight Capital. What Mr. Einhorn is proposing is essentially the creation of a preferred stock. GM has had several series of such mezzanine securities in its history, but all those issues shared one common characteristic: GM received cash proceeds from issuing them. The lunacy of Mr. Einhorn's plan is that GM would creating the same liability (dividends paid at rate preferable to those of common) without generating a dollar in proceeds. Mr. Einhorn is correct that GM shares have severely lagged the market since their "re-IPO" on November 17, 2010.

Source: Forbes June 06, 2017 16:33 UTC