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David Einhorn, the activist hedge fund manager, is trying to grab four seats on the board of General Motors, the car maker says.

Mr Einhorn’s Greenlight Capital has instigated a proxy battle in an attempt to get the company to agree to an unusual financial restructuring, according to a combative company statement rejecting the idea.

Greenlight wants GM to split its share in two: one new share would pay dividends, to satisfy income investors; the other would scrap the payout and focus on share buybacks. The hedge fund went public with its plan in a presentation.

But GM came out fighting, telling shareholders to reject Greenlight’s nominees and explaining why it dismissed the share split idea. In a statement it said:

The proposed dividend security would not help GM sell more cars, drive higher profitability, or generate greater cash flow — nor would it address the fundamental sector factors affecting GM’s stock price.

It also listed a litany of other risks, namely:

The loss of GM’s investment grade credit rating;

Unknown and uncertain market demand and liquidity for the proposed securities, resulting in depressed pricing and selling pressure;

Unproven and entirely speculative valuation impact; and

Material governance challenges arising from two classes of stock with divergent objectives.

Earlier, Mr Einhorn had said:

Our plan would unlock significant value and lower GM’s cost of capital. It would provide the company complete strategic flexibility without adding any default, refinancing, or balance sheet risk.

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