DETROIT (Bloomberg) -- Investors holding bonds in the old General Motors Corp. will receive stock and warrants for shares in the new General Motors Co. on April 21, an action that analysts said may depress the stock price.
Old GM, now known as Motors Liquidation Co., will give bondholders 150 million shares in GM and warrants to buy 272.8 million more shares. A trust holding the shares will distribute them directly to bondholders' brokerage accounts on or after April 21, according to a memo distributed Wilmington Trust Inc., a money-management firm hired by the creditors' committee.
Some of the bondholders are retail investors who may sell the shares and briefly sink GM's stock price, said David Whiston, an analyst with Chicago-based Morningstar Inc. Investors have probably priced in the dilution, so it won't change GM's long-term value, he said. He has not changed his $48 a share valuation based on the release of shares to bondholders.
"I would think that there will be more selling than holding," Whiston said. "Any sell-off in GM is a buying opportunity. Long term, I think the company is positioned very well."
Bondholders were promised stock and warrants in the new GM to make up for some of their loss during the predecessor company's government-backed bankruptcy.