David Einhorn's Greenlight Says GM Misled On Stock Plan

(RTTNews) - Billionaire investor David Einhorn's hedge fund Greenlight Capital has filed a proxy request with the SEC to nominate three members to General Motors' (GM) board

Einhorn also said that the auto giant mischaracterized the hedge fund's proposal and mislead investors and credit rating agencies about its merits.

On March 28, Greenlight submitted a proposal to split GM's common stock into two classes: the Dividend Shares that would receive the current dividend, and the Capital Appreciation Shares that would participate in the remaining earnings, cash flows and future growth of the company.

According to Einhorn, the proposal would have helped General Motors to lower its cost of capital and improve financial flexibility as well as increase market capitalization by as much as $38 billion.

However, GM dismissed the idea and claimed that Greenlight's proposal would lead to a credit rating downgrade. Moody's Investors Service, Standard & Poor's and Fitch Ratings said that a share class with a fixed dividend could prompt them to lower their credit ratings.

"To ensure the GM board objectively considers our plan and to look after the best interests of shareholders, we are nominating a slate of experienced candidates," Einhorn said in Greenlight's statement. "Our nominees are proven business leaders who are committed to working with the incumbent directors and exploring all avenues to address GM's persistent valuation gap and create value for all shareholders."

Greenlight's Director nominees are Leo Hindery, Jr., Vinit Sethi and William Thorndike.