General Motors, the largest US automaker and the third biggest in the world has enlisted the help of two investment banks in its drive to draw an appropriate response to the shareholder group that asked the company to embark in an $8 billion share buyback.
The activist investor group, led by Harry Wilson – a former member of the US-appointed task force that assisted the carmaker in its 2009 bankruptcy restructuring process – is also asking for a seat on the board of management of the automaker. General Motors has told Reuters it was now partnering with Morgan Stanley and Goldman Sachs for advice on how to respond to the investor pledge of four hedge funds that are asking the company to some of its $25 billion in cash. Wilson has forwarded a proposal to begin an $8 billion share buyback strategy in order to lift investor share value and wants a seat on the board of management when the current boards’ mandate expires at GM’s annual meeting in June.
Wilson, 43, has partnered with David Tepper’s Appaloosa Management and three other hedge funds: Taconic Capital Advisors, Hayman Capital Management and HG Vora Capital Management, jointly owning around 31.2 million shares, or 1.9 percent of GM stock. The investor pledges for more capital return are not something new and the automaker last week announced plans to lift its quarterly dividend by 20 percent. GM Chief Financial Officer Chuck Stevens also hinted to more measures to increase capital return, after the company resolves legal issues tied to last year’s scandalous ignition switch recall.