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GE Shares - Synchrony Financial Swap.

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Deal Addict
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Feb 9, 2012
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GE Shares - Synchrony Financial Swap.

Hello. Looking for some help on this please. Got the notice below for GE shares that we have (600). What should we do? What makes more sense?
BMO InvestorLine has been informed that General Electric all 705,270,833 shares of Synchrony Financial which are owned by GE Consumer Finance Inc a Subsidiary of General Electric Company for common shares of General Electric Company, subject to the terms and conditions of the date of this prospectus and the Letter of Transmittal.


Terms:

Option 1: Exchange Shares (Subject to Proration for Non Odd Lot holders)(See Important Notes)
To receive a number of shares of Synchrony Financial at a rate to be determined for each share of General Electric tendered.

Option 99: Do Nothing (Default) - Holders to retain security

Important Notes:

Exchange Rate
For each USD $100 of GE Common stock accepted in the exchange offer, holders will receive approximately USD $107.53 of Synchrony common stock, subject to an upper limit of 1.1308 shares of Synchrony common stock per share of GE common stock. The exchange offer does not provide for a lower limit or minimum exchange ratio. If the upper limit is in effect holders will receive less than USD 107.53 of Synchrony common stock for each USD $100 of GE common stock.
Odd-Lot Preference
Shareholders tendering 99 shares or less will be exempt from any prorated acceptance. To qualify for the odd lot preference a holder must beneficially own less than 100 shares and tender their entire position.


Proration
Proration for each tendering shareholder will be based on the number of shares of GE Common stock tendered by that shareholder in the exchange offer, and not on that shareholder's aggregate ownership of GE common stock. Any shares of GE common stock not accepted for exchange as a result of proration will be returned to tendering shareholders.
Distribution
If the offer is not fully subscribed, GE will conduct a distribution of its remaining shares of Synchrony common stock through a special dividend to all GE Shareholders, on a pro rate basis within 12 months of the closing of the exchange offer.


BMO InvestorLine requests that you direct inquiries pertaining to the offer (other than submission of instructions) to General Electric Company. Shareholders are advised to obtain independent advice and consult the offering circular regarding any possible tax consequences and for further details of the offer.

Please call BMO InvestorLine on 1-888-776-6886 and provide your instructions. Faxes and/or written instructions will not be accepted. Instructions must be received prior to November 13, 2015 9:00am Eastern Standard Time (EST). Any instructions received after this time will be sent on a best effort basis only. If no instructions are received, BMO InvestorLine will take no action.

BMO InvestorLine does not charge your account any commission for reorganizations or entitlements. Please allow 1-3 weeks after the expiry date for processing of Canadian issues and up to 90 days if US based. If you tender your shares to an offer, please ensure you do not place any sell orders on the position. This may result in a short position and financial losses that you may be responsible for. If you wish to place a sell order, please contact us first to ensure your original instructions can be cancelled.

For offers that include a cash payment, the payment will be deposited in the account in the same currency as the currency in which the position is held in the account, which may result in exposure to a foreign currency conversion. BMO Investorline will not be responsible for any losses incurred as a result of a foreign exchange conversion.

Regards,
BMO InvestorLine
The information in this letter is compiled from sources believed reliable. However, BMO InvestorLine does not ensure the accuracy, adequacy, timeliness, completeness, or fitness of the data and as such assumes no liability for any losses resulting in its use.
17 replies
Deal Addict
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Feb 9, 2012
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rumblebelly wrote: Do nothing. Free shares. I'm keeping mine.

R
Please can you help me understand what you mean by free shares?
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Dec 14, 2010
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cessnabmw wrote: Hello. Looking for some help on this please. Got the notice below for GE shares that we have (600). What should we do? What makes more sense?
It all depends on what your goals and risk profile are. You can do nothing or you can use this opportunity to buy SYF at a discount.

"Synchrony is in the business of running the private label credit cards at retailers across North America (this accounts for about two thirds of their profits). At the present time, GE Capital (which is still part of General Electric) still owns 85% of the Synchrony business. It’s a pretty sturdy business, with a $60 billion portfolio that has grown from being a $50 billion loan portfolio at the time GE started releasing independent data for Synchrony in 2012. It earns 3% on total assets, which is very lucrative for a lending arm. This likely translates into profit growth around 9-12% each year in healthy or ordinary economic conditions.

Synchrony has yet to initiate a dividend, which bars a lot of institutional investors (endowments, pension funds, annuities, and the like) from making investments in the company according to the terms of their governing charters. Usually, credit companies can hit a dividend payout ratio between 40% and 60%, and given that Synchrony currently earns $2.60 per share in profits, you are looking at an eventual dividend payout between $1.04 and $1.56 based on the company’s current profits (though Synchrony won’t come out and just start paying this amount—usually, it’s more fun for the Board to start the payout at $0.10 per share or something absurdly low so that it can then brag about growing the dividend at 15% per year for a decade, or something like that). Assuming there is no impending financial crisis on the horizon, this is the type of stock that is worth something around $40 per share.

If you are contemplating an investment in Synchrony, it probably makes sense if: (1) you already have a very well diversified portfolio, (2) you are looking for higher than market average capital gains and eventual dividend growth and have the patience to see it through, and (3) you conclude that we are far removed from another financial crisis. For the truly conservative account, Synchrony does not make sense."

Here is some additional info: http://seekingalpha.com/article/3584916 ... -synchrony


Rod
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Dec 14, 2010
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rumblebelly wrote: Do nothing. Free shares. I'm keeping mine.

R
Incorrect - With the Synchrony spinoff from General Electric, shareholders faced a spinoff that wasn’t really a spinoff at all—it’s a share swap—in which you have to trade in your General Electric shares in order to receive shares of Synchrony. There’s no “free” business that you get to pick up; you have to forfeit your GE shares or use available cash to buy shares of Synchrony if you want to own some.

Rod
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Jun 27, 2002
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rodbarc wrote: Incorrect - With the Synchrony spinoff from General Electric, shareholders faced a spinoff that wasn’t really a spinoff at all—it’s a share swap—in which you have to trade in your General Electric shares in order to receive shares of Synchrony. There’s no “free” business that you get to pick up; you have to forfeit your GE shares or use available cash to buy shares of Synchrony if you want to own some.

Rod
You're right Rod. Thanks for the clarification. Sorry my mistake. I'm staying pat though. I will hang onto my shares of GE.

Rumblebelly
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Jun 27, 2002
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cessnabmw wrote: Please can you help me understand what you mean by free shares?
I'm sorry but there are no free shares. Rod is correct and it's a swap of shares.

Rumblebelly
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Aug 19, 2016
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in hindsight, swapping the GE shares with SYF was a great move.

I am just wondering, what do you guys think of GE now? It has fallen so badly (almost as bad as 2008).
Oh, I am concerned with their massive debts and their unfunded pension obligations.
Sr. Member
Aug 22, 2012
836 posts
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Mark Town
GE should go up this year.

Dog of DOW. Bull market. I loaded it under 18$.
Deal Fanatic
Jan 21, 2014
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me too, but that was just averaging down from older shares. I am still in the red right now but very optimistic, while collecting dividends
Deal Addict
Jul 3, 2006
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mkl38s wrote: me too, but that was just averaging down from older shares. I am still in the red right now but very optimistic, while collecting dividends
yeah could should back up around $25 $27 before end of year
Deal Expert
Jan 27, 2006
21844 posts
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I got out of both this year way before the GE crash. While GE might go up in the short term, even dead cats bounce off the sidewalk if dropped from enough height.
Deal Expert
Jan 27, 2006
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You mean GE? Stay away until the dust settles.
Jr. Member
Jan 6, 2015
144 posts
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Québec
craftsman wrote: You mean GE? Stay away until the dust settles.
:( maybe a good time to pickup some call options.
Deal Expert
Jan 27, 2006
21844 posts
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jules6565 wrote: :( maybe a good time to pickup some call options.
Maybe or even sell it short as it continues to drift downwards. I think the recent fake out move by the stock (short rally and then the most recent drop) will scared investors especially those who jumped in recently thinking that the worse was already baked in. I noticed that the industry pundits have now turned negative on the new CEO stating that he is still a member of the old guard who got them into the mess and the fact that he hasn't put out a plan to get them out or made any large changes shows that nothing good is going to happen in the short term.

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