GM Bondholders Reject Debt-Swapping Offer

WILX (MI) ^ | 04/28/09 | Various

[Kieri]

A committee representing General Motors Corp. bondholders is rejecting the company's debt exchange offer, saying it pushes the automaker closer to a bankruptcy filing. The committee, representing large, institutional bondholders such as Fidelity and John Hancock, said in a statement Monday that GM's offer is inadequate and shows favoritism to the United Auto Workers union. The UAW would receive about a 39 percent stake in GM if it agrees to take $10 billion in health care trust payments in stock. Bondholders will get a 10 percent stake in GM if 90 percent of its $27 billion in unsecured debt is swapped for stock. The group was working with GM to reach an agreement before the company made a formal offer, but the two sides have not negotiated since March.

[Kieri]

From everything I've heard, this will force Government Motors into bankruptcy, Chapter 11.

[Lonesome in Massachussets]

There must be a downside.

[eureka!]

Good. They need the BK for a cram down on the unions which is what killed them. Otherwise, watch tax $$ fund the unions for decades to come...

[KarlInOhio]

As GM goes, so goes America - In the current case that direction is socialist.

[Tarpon]

In a real bankruptcy, one where you hope to remain viable and fight another day, bond holders go to the front of the line ... Not first out the rabbit hole

[Kieri]

I’m keeping an eye on card check. I’m betting the liberals will try to ram this through congress back-door style, as a compromise to the UAW.

[Abathar]

"GM's offer is inadequate and shows favoritism to the United Auto Workers union"

Of course it does, now.

[longtermmemmory]

Keeping the feds out of GM as much as possible is good for GM and good for america.

[Melchior]

If the government owns the majority stake in
GM it will not go bankrupt. Instead, we, the taxpayers will end up funding a failure.

[TheWasteLand]

Shouldn’t a judge be presiding over this? The UAW has $10B and gets 39%, whereas bondholders have $27B and get 10%? How is this legal?

[eureka!]

That and more. *sigh*

[Oldexpat]

The bond holders can’t possibly get a worse deal from a bankruptcy court.

[Petronski]

These aren't just bondholders, mind you. Some of them are secured bondholders.

There's no way in hell they should be forced to settle for 5 or 10 cents on the dollar.

Enough with the fascist bullshit already. Time to file.

[Army Air Corps]

It will be the US version of Britsh Leyland.

[MHGinTN]

The affirmative action Marxist won the election. He makes the rules now.

[PDMiller]

The UAW would receive about a 39 percent stake in GM if it agrees to take $10 billion in health care trust payments in stock. Bondholders will get a 10 percent stake in GM if 90 percent of its $27 billion in unsecured debt is swapped for stock.

Pretty fuzzy math, wouldn't you say!

[Petronski]

How is this legal?

Fascists see laws like ice cream: easily melted.

[YOUGOTIT]

Bond holders get 10% for their $27 billion and the left wing who caused it gets 39% for a lie that says they would have gotten $10 billion for health care but when one is bankrupt there is no money to pay for health care. And the socialist get 50% of the company. So the people that have invested in bonds will be eliminated and their retirement money will be gone and given to the anti-American left. And the anti-American left who caused this in the first place will be placed in charge. I do not think that I will ever again buy a GM car.

[pierrem15]

That's the whole point: the gov was trying to get 90% of the creditors to agree to their 'plan' to shift all their debt and equity to the UAW. Since some of these players are caught on the TARP hook, the gov probably thought this was an offer "they couldn't refuse".

Looks like some of them grew a backbone, and realized they would get a fairer break from a bankruptcy judge than the kleptocrats in the Obama admin and their UAW pals.

[curiosity]

The offer it made to the bondholders would be an antrocity. It would leave the government and UAW in control of 90% of the stock, plus they would still have some debt claims. The bondholders whould only end up with 10% of the stock and have their debt claims written down to zero. It is hard to find an example of a greater financial injustice.

More than ever, it is absolutely imperative that a bankruptcy court judge resolve GM. Otherwise we will be left with a state and union owned entity permanently sucking the public teat.