GM has filed a paper (here) with the SEC, "PRE 14C" which lays out a plan to dilute its common stock, by issuing new shares to the U.S. Treasury in exchange for debt.
GM will issue enough new shares so that the total number outstanding will be 62 billion. There are currently about 610 million shares outstanding. This is a dilution of 100:1. This will reduce the "par value" of $1.66 to $0.01/share. They will then do a reverse split of 1:100, reducing the outstanding shares back to 620 million.
The effect of this is that current common stock holders will be wiped out.
Example: you own 1000 shares which are currently worth around $1600. Your 1000 shares will become 10 shares, worth about $16. total. That's a loss of 99%.
