General Motors plans to convert its preferred shares to common shares effective Dec. 1. The timing was set under terms of GM’s initial public offering in November 2010, said GM spokesman Tom Henderson.
Each share of the company’s Series B convertible preferred stock will automatically convert to 1.3736 shares of common stock. Holders will be paid cash for any fractional share, Henderson said. The number of common shares to be issued on conversion was determined based on the average of GM’s closing prices per share on the New York Stock Exchange over the 40-trading-day period ending on Tuesday.
GM will stop paying dividends on the Series B stock. Those payouts totaled $59.4 million each quarter. The automaker has paid no dividend on its common stock since before its 2009 taxpayer-funded bankruptcy. The board has not said when the payouts might resume.
Last week’s announcement by the U.S. Treasury that it will sell its last GM shares by Dec. 31 boosted expectations that a dividend will be paid relatively soon. The company has not commented on whether or when it will pay a dividend.
Henderson said the stock conversion adds about 137 million shares of common stock, bringing the total to about 1.523 billion. The exact number won’t be known for at least a week as payouts are made on fractional shares.