Greenlight Capital intensified its battle against General Motors, publishing credit ratings documents that it said the car manufacturer inappropriately changed to weaken the hedge fund’s proposal to produce two classes of GM stock.
Greenlight, which owns 3.6 percent of the automaker shares, has stated its dual share strategy would increase GM’s worth by creating a dividend class and a routine stock class known as capital appreciation shares.
In its proxy declaration last month, Greenlight stated GM substantially changed the plan’s term sheet before it existed to credit score agencies, a move the hedge fund stated was indicated to turn the firms against the structure.
On Thursday, Greenlight posted its initial term sheet, which it stated was given to the companies, together with an annotated file highlighting the modifications.
“Our strategy does not have cumulative dividends,” hedge fund stated in among the annotations – mentioning an essential sticking point in the debate over the strategy. In another annotation, Greenlight underlined a modification from the original and said GM developed a term to misrepresent its strategy.
Greenlight, run by David Einhorn, argued that the dividend shares work as common equity and should not be dealt as debt.
GM has stated that since hedge fund’s strategy calls for the dividends on the dividend shares to be gotten ahead of capital appreciation share distributions, the structure is cumulative by definition. As per GM’s analysis, this suggests any dividends that build up in duration where there is no payout must be paid ahead of any distributions, consisting of share repurchases.
Ratings firms have agreed the company in judgment that the dividend class functions like a debt security, which could impact GM’s credit rating.
Greenlight in its annotated letter mentioned over 13 changes made to the actual term sheet.
GM said on Thursday that it provided details properly and responsibly to the ratings agencies, a declaration that Greenlight disagreed with in a afternoon response.
