General Motors last week offered to exchange most of two special classes of preferred stock, worth a total of about $363.4 million, for a newly created financial instrument that pays higher interest to investors and reduces taxes for GM.
For instance, GM will replace about 90 percent of the outstanding Series D shares, which pay 7.92 percent, for new Trust Originated Preferred Securities, called TOPrS ('toppers'), which pay investors 8.67 percent.
TOPrS represent the right to receive distributions from a trust.
The offer began Tuesday, June 3, and is scheduled to expire July 2.
'For investors, this represents an opportunity to exchange currently held preference stocks for new securities with higher cash distributions,' said John Finnegan, GM treasurer.
'For GM, it will help to achieve competitive financing and certain tax efficiencies.'