General Motors has announced that all outstanding shares of its 4.75% Series B mandatory convertible junior preferred stock to shares of GM Common Stock on December 1, 2013. Unless previously converted, each share of the Preferred Stock will automatically convert into 1.3736 shares of GM Common Stock on the conversion date.
According to GM, “The number of shares of Common Stock issuable on conversion was determined based on the average of the closing prices per share on the New York Stock Exchange of our Common Stock over the 40-trading-day period ending on Nov. 26, 2013, in accordance with the terms of the Certificate of Designation for the Preferred Stock.” Additionally, the conversion of the stock will result in the cessation of the accumulation of the $59.4 million quarterly and $237.5 million annual dividend. Instead of any fractional shares of Common Stock, GM will “pay an amount in cash determined in accordance with the terms of the Certificate of Designation for the Preferred Stock.”
GM also stated in a news release that “from and after the Mandatory Conversion Date, shares of the Preferred Stock not previously converted will be deemed to be no longer outstanding”, and that “all rights of the holders with respect to such Preferred Stock will terminate, except for the right to receive the number of whole shares of Common Stock issuable upon mandatory conversion of the Preferred Stock and cash instead of any fractional shares of Common Stock”, as described previously.
Previously, GM included shares of the Preferred Stock as eligible dilutive securities in its calculation of diluted share count. Upon conversion, the newly-issued shares of Common Stock will be included in its basic share count.
GM’s announcement coincides with the U.S. Treasury selling its remaining stake in the automaker.