Reuters – PetroAlgae is one of those many clean-tech companies that seem to burn through cash faster than a Hummer goes through a gallon of gas. Yet something curious is going on with shares of this Melbourne, Florida-based company, which is hoping to make money from turning algae into oil.

Over the past month, the stock price of PetroAlgae has rocketed from $8 to as high as $32.75 on ultra-thin trading of the shares (as of late Monday it had fallen back to around $10).

PetroAlgae boasts a rather healthy $1 billion market value — after being as high as $3.4 billion earlier Monday — even though it has no revenues, a $34 million accumulated deficit and its auditor isn’t sure the company can continue as a going concern.

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New York (HedgeCo.Net) – The Obama administration is considering a deal in which they would forgive part of the $13.4 billion owed to them from General Motors Corp. in exchange for an equity stake in the company, according to a report by Bloomberg News who citing people familiar with the matter.

The deal comes as GM approaches their June 1 deadline to show they can become viable, the sources said.  

GM is already considering breaking up the company into a sector comprised of only the profitable parts, such as Chevrolet and Cadillac, while the non-profitable entities, such as Hummer, can be liquidated.

GM still has major debt obligations to its bondholders, who are owed about $27.5 billion.  The company also owes its health care fund about $20 billion.  Retirees who are entitled to health care benefits would most likely get more equity in the new entity than the bondholders. 

Bondholders previously opposed a plan by GM that would give them 90 percent equity in the newly restructured company, though that would have required them to swap most of their stake at the time. 

President Obama has been vocal in his belief that bankruptcy is the best option for GM, though new CEO Fritz Henderson is doing everything he can to avoid that scenario.  GM continues to work with the U.S. Treasury and the Obama administration in hopes of achieving a new, reorganized business model.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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