Printer Friendly

GM DISCLOSES PROPOSAL FOR CLASS E STOCK CONTRIBUTION TO PENSION PLAN

 NEW YORK, Nov. 15 /PRNewswire/ -- General Motors (NYSE: GM) today said that it is considering a contribution of 185 million shares of GM Class E common stock to its U.S. Pension Plan for Hourly Rate Employees to reduce the corporation's unfunded liability to the plan. The market value of these shares at the Nov. 15, 1993, NYSE closing price of $31.00 for Class E stock is approximately $5.7 billion.
 GM will disclose the potential contribution in its third-quarter report to be filed today with the Securities and Exchange Commission.
 The contribution of Class E stock is dependent upon clearing a number of regulatory hurdles, said G. Richard Wagoner, Jr., GM executive vice president and chief financial officer. In order to proceed, GM must obtain various exemptions and rulings from a number of U.S. government agencies. In addition, GM will seek relief from the excise tax that can apply when large contributions are made to pension plans.
 The Administration's Pension Benefit Guaranty Corporation (PBGC) reform bill (HR3396) proposes this relief. GM has been in discussions with the PBGC regarding its unfunded pension liability, Mr. Wagoner said.
 If GM obtains the necessary government approvals, the stock contribution would require approval by the GM Board of Directors. No assurance can be given at this time that the exemptions and rulings will be obtained, Mr. Wagoner said.
 The contribution of Class E shares to the hourly pension plan would not dilute earnings attributable to the currently outstanding Class E shares because issuance of these shares will not increase the dividend base used for determining dividends and earnings per share. GM believes that this action would be neutral to earnings per share for GM $1-2/3 common stock.
 Other than the 45 million Class E shares held in reserve by GM in relation to the possible conversion of Series C convertible preference stock issued in 1992, the proposed contribution represents the remaining unissued dividend base used for determining Class E dividends and earnings per share.
 "If approved, this proposed contribution would be an important step in addressing GM's unfunded pension liability," Mr. Wagoner said. "It would increase the pace at which the unfunded obligation could be reduced." GM has made continued progress in improving the operating and financial performance of its North American Operations, he said. Accordingly, GM expects to make the cash contributions that it would otherwise owe in the near-term as if the Class E stock had not been contributed.
 If the proposed contribution is made, the Class E shares would be managed by an independent trustee of the pension plan who would have certain limited registration rights pertaining to the shares. GM anticipates the independent investment manager would manage sales of the stock in a prudent manner so as to maximize the value of the shares held by the plan.
 Electronic Data Systems (EDS) Chairman, President and Chief Executive Officer Lester M. Alberthal said EDS fully supports the proposal because a more financially strong GM is in the best interest of EDS. He added that the proposed contribution would have no effect on EDS's business or its customer relationships.
 Class E is a common stock issued by General Motors which is traded on the New York Stock Exchange. The current dividend policy of the GM board is to declare Class E dividends on the basis of 30 percent of the prior year's earnings of EDS.
 -0- 11/15/93
 /CONTACT: Toni Simonetti of General Motors Corp., 212-418-6380/
 (GM)


CO: General Motors Corp. ST: New York IN: AUT SU:

SM -- DE042 -- 4670 11/15/93 16:51 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Nov 15, 1993
Words:599
Previous Article:HEARINGS RESUME ON LORENZO AIRLINE APPLICATION; FORMER CONTINENTAL CHIEF BLASTS LORENZO AS UNFIT
Next Article:BLUE CROSS AND BLUE SHIELD OF FLORIDA REPORTS RECORD GROWTH OF MANAGED CARE
Topics:

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters