GM Stock at Value-Menu Price; Ford Offering Lukewarm

GM Stock at Value-Menu Price; Ford Offering Lukewarm

By Bill Visnic

With investors nervously interpreting the General Motors Corp. tea leaves, GM's stock price plunged to $1 on Wednesday - leaving for Americans the choice between a value-menu order of French fries or a share of GM stock.

After the dip, GM's share price bounced back some 25 percent or better by midday, but the price range nonetheless reflected levels GM common shares hadn't visited since the 1930s.

GM's stock price has been steadily declining in the past months - and since the bankruptcy of Chrysler LLC on May 1 - as media reports and industry-analyst talk underscore an increasing certainty that GM, too, will have to make a trip to bankruptcy court when the company's June 1 restructuring deadline given by the Obama Administration arrives.

GM's own CEO, Fritz Henderson, said on Monday that the prospect of GM's bankruptcy has become "more probable" - not the least because GM, already subsisting on federal loans, reported earlier this month it lost $6 billion in the first quarter this year and has lost a total of $82 billion since 2004, the last year in which GM made a profit.

Meanwhile, in a move to hike liquidity levels, on Tuesday Ford Motor Co. issued a new offering of up to 300 million shares of common stock, setting a price of $4.75, despite the fact the stock had extended to more than $6 the prior week. Following the action, Ford's stock price retreated 4 percent or more and was hovering at barely more than the $4.75 offering price.

Marketwatch reported that Shelly Lombard, a high-yield analyst at Gimme Credit, said the stock offering was "a shot across the bow" at GM and Chrysler, both of which were forced to accept government loans to remain solvent; Ford has not done so.

Lombard told Marketwatch, however, that Ford also could require government loans by the end of the year because of "cash falling close to minimum maintenance levels by the end of this year." 

Bill Visnic:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter