Corey Ribotsky – NIR Group

After General Motors Corporation filed for bankruptcy the U.S. Government created a bailout plan that looked and felt remarkably like a PIPE transaction. Or as Corey Ribotsky puts it in his insightful opinion piece about the bailout, “If it looks like a duck and quacks like a duck, then it must be a duck.”

The heart of the bailout plan includes giving $30.1 billion in financing which take GM through the process of bankruptcy while the government takes a 60% stake. This stake includes $8.8 billion in debt and preferred stock in the new company that will be created. Ontario, Canada will also lend GM a huge sum, $9.5 billion and will receive in return $1.7 billion in debt and preferred stock in addition to 12% of the equity in the new company which will be a public entity. All the preferred stock will be registered with the SEC so that resale of the shares to the public can be carried out.

According to Corey Ribotsky these transactions look obviously like the PIPE transactions he has been involved in for over 10 years as an investment manager at the NIR Group in Roslyn, New York. Quack!