By Ben Klayman
DETROIT (Reuters) - Plans by General Motors Co's
Harry Wilson, who was a member of the task force, notified the Detroit automaker on Monday that he wanted the automaker to spend $8 billion to buy back shares, and that he will nominate himself for election to the board of directors this spring. GM, which has 13 people on its board, disclosed the letter Tuesday.
"The company's common stock is substantially undervalued, the company is substantially overcapitalized and this repurchase of undervalued shares will create substantial shareholder value," Wilson said in his letter.
GM shares rose 2.5 percent to $36.89.
Wilson, 43, said he was acting on behalf of himself and investment funds Taconic Capital Advisors, Appaloosa Management, HG Vora Capital Management and Hayman Capital Management, which together own about 34.4 million shares, or 2.1 percent of GM stock.
Wilson, who last May called GM's shares "woefully undervalued," will receive a percentage of the group's profits from their investment in the company.
While GM reiterated that it acts in the best interests of shareholders, the plan launched by Wilson and the funds is a direct challenge to the company's board. The company declined to make any executives or the chairman, Tim Solso, available to comment.
Harry Wilson notified the Detroit company he intends to nominate himself as a candidate for the board at the 2015 annual shareholders meeting and offer a proposal to complete the share buyback program within a year from the next annual meeting, which is historically held in June.
Wilson, who notified GM of his intentions during a Feb. 3 meeting with CEO Mary Barra about unrelated issues, could not be reached immediately for comment.
GM has come under increasing pressure to return some of its $37 billion in liquidity, including $25 billion in cash, to shareholders.
The company said last week it will increase the quarterly dividend by 20 percent, and that it has boosted its capital spending plans for 2015, also by 20 percent, to $9 billion. Chief Financial Officer Chuck Stevens told Reuters that more cash could be returned to investors as soon as the second half of the year.
J. Kyle Bass, Hayman's chief investment officer, declined to comment, referring questions to Wilson. Officials with the other three funds could not be reached immediately.
GM said it has been in regular contact with some of the investors identified in the group as recently as Feb. 4, and that they did not indicate their intention to nominate directors to the board. The company said its board will evaluate Wilson's candidacy and make a recommendation.
(Reporting by Ben Klayman; Editing by Jeffrey Benkoe)
