(New throughout, adds Greenlight comment)
By Michael Flaherty and Ankit Ajmera
May 4 Greenlight Capital escalated its battle
against General Motors Co on Thursday, posting credit
ratings documents that it said the automaker inappropriately
changed to undermine the hedge fund's proposal to create two
classes of GM stock.
Greenlight, which owns 3.6 percent of GM shares, has said
its dual share plan would boost GM's value by creating a
dividend class and a regular stock class known as capital
In its proxy statement last month, Greenlight said GM
substantially altered the plan's term sheet before it was
presented to credit rating agencies, a move the hedge fund said
was meant to turn the agencies against the structure.
On Thursday, Greenlight posted (www.unlockgmvalue.com) its
original term sheet, which it said was given to the agencies,
along with an annotated document highlighting the changes.
"Our plan does not have cumulative dividends," Greenlight
said in one of the annotations - pointing out a key sticking
point in the debate over the plan. In another annotation,
Greenlight highlighted a change from the original and said GM
invented a term to misrepresent its plan.
Greenlight, run by David Einhorn, argued that the dividend
shares function as common equity and should not be treated as
GM has said that because Greenlight's plan calls for the
dividends on the dividend shares to be received ahead of capital
appreciation share distributions, the structure is cumulative by
definition. According to GM's interpretation, that means any
dividends that accumulate in periods where there is no payout
must be paid ahead of any distributions, including share
Ratings agencies have sided with the company in ruling that
the dividend class functions like a debt security, which could
affect GM's credit rating.
Greenlight in its annotated letter pointed out more than 13
changes made to the original term sheet.
GM said on Thursday that it presented information accurately
and responsibly to the ratings agencies, a statement that
Greenlight took issue with in a late afternoon response.
"Greenlight’s claims regarding GM’s engagement with the
rating agencies relative to Greenlight’s Dividend Shares
proposal are baseless..." GM said, calling the plan "financial
engineering." The company's own annotated version is available
Earlier on Thursday, Greenlight urged GM shareholders to
vote for its plan and its three director nominees to GM's board
at the company's shareholder meeting next month.
Greenlight said GM had lagged peers and generated only a 15
percent total return for shareholders since 2010.
(Reporting by Michael Flaherty in New York and Ankit Ajmera in
Bengaluru; Editing by Sai Sachin Ravikumar and Supriya Kurane
and David Gregorio)