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GM Bondholders Reject Debt-Swapping Offer
WILX (MI) ^ | 04/28/09 | Various

Posted on 04/28/2009 10:48:31 AM PDT by 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.


TOPICS: Business/Economy; Culture/Society; Government; US: Michigan
KEYWORDS: bankruptcy; gm; michigan; uaw
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From everything I've heard, this will force Government Motors into bankruptcy, Chapter 11.
1 posted on 04/28/2009 10:48:32 AM PDT by Kieri
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To: Kieri

There must be a downside.


2 posted on 04/28/2009 10:50:00 AM PDT by Lonesome in Massachussets (The age of 0bama: the transient ischemic delusions of adequacy decade.)
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To: Kieri

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...


3 posted on 04/28/2009 10:50:40 AM PDT by eureka! (Elections have consequences, boy howdy. *sigh*)
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To: Kieri
As GM goes, so goes America - In the current case that direction is socialist.
4 posted on 04/28/2009 10:51:34 AM PDT by KarlInOhio (No free man bows to a foreign king.)
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To: Kieri

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


5 posted on 04/28/2009 10:51:45 AM PDT by Tarpon (You abolish your responsibilities, your surrender your rights.)
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To: eureka!

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.


6 posted on 04/28/2009 10:52:06 AM PDT by Kieri (The Conservatrarian)
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To: Kieri
"GM's offer is inadequate and shows favoritism to the United Auto Workers union"

Of course it does, now.

7 posted on 04/28/2009 10:52:13 AM PDT by Abathar (Proudly posting without reading the article carefully since 2004)
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To: Kieri

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


8 posted on 04/28/2009 10:53:02 AM PDT by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: Kieri

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


9 posted on 04/28/2009 10:54:04 AM PDT by Melchior
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To: Kieri

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?


10 posted on 04/28/2009 10:55:21 AM PDT by TheWasteLand
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To: Kieri

That and more. *sigh*


11 posted on 04/28/2009 10:55:39 AM PDT by eureka! (Elections have consequences, boy howdy. *sigh*)
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To: Melchior

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


12 posted on 04/28/2009 10:55:49 AM PDT by Oldexpat
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To: Kieri
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.

13 posted on 04/28/2009 10:57:18 AM PDT by Petronski (For the next few years, Gethsemane will not be marginal. We will know that garden. -- Cdl. Stafford)
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To: Melchior

It will be the US version of Britsh Leyland.


14 posted on 04/28/2009 10:57:50 AM PDT by Army Air Corps (Four fried chickens and a coke)
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To: TheWasteLand

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


15 posted on 04/28/2009 10:57:55 AM PDT by MHGinTN (Believing they cannot be deceived, they cannot be convinced when they are deceived.)
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To: Kieri
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!

16 posted on 04/28/2009 10:58:20 AM PDT by PDMiller
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To: TheWasteLand
How is this legal?

Fascists see laws like ice cream: easily melted.

17 posted on 04/28/2009 10:58:31 AM PDT by Petronski (For the next few years, Gethsemane will not be marginal. We will know that garden. -- Cdl. Stafford)
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To: Kieri

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.


18 posted on 04/28/2009 10:58:41 AM PDT by YOUGOTIT (I will always be a Soldier)
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To: TheWasteLand
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.

19 posted on 04/28/2009 10:59:39 AM PDT by pierrem15 ("Let all the poisons that lurk in the mud hatch out.")
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To: Kieri
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.

20 posted on 04/28/2009 11:00:40 AM PDT by curiosity
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To: Kieri

Good on the bond holders. Zero’s sweetheart deal for the unions goes down in flames.


21 posted on 04/28/2009 11:00:55 AM PDT by edge10 (Obama lied, babies died!)
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To: Lonesome in Massachussets

Yes, there is a downside!

See:

http://www.freerepublic.com/focus/f-bloggers/2239054/posts

Government, UAW To Own 89% Of GM In Restructuring


22 posted on 04/28/2009 11:01:09 AM PDT by Texas Fossil (The last time I looked, this is still Texas where I live.)
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To: Army Air Corps

Or the US version of 1930s Volkswagen.


23 posted on 04/28/2009 11:01:10 AM PDT by dfwgator (1996 2006 2008 - Good Things Come in Threes)
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To: pierrem15
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.

QFT.

24 posted on 04/28/2009 11:02:14 AM PDT by TheWasteLand
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To: TheWasteLand

Because their messiah Zero says so.


25 posted on 04/28/2009 11:02:16 AM PDT by edge10 (Obama lied, babies died!)
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To: Kieri

Obama is ALREADY paying off the Unions!!!


26 posted on 04/28/2009 11:02:45 AM PDT by 2harddrive (...House a TOTAL Loss.....)
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To: Kieri

This wasn’t an offer, it was an Attempted robbery !!


27 posted on 04/28/2009 11:02:53 AM PDT by 4Speed
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To: Lonesome in Massachussets
"There must be a downside.

It's a negotiation. Obama's $.10 on the dollar first offer was just to let the bondholders know who's the boss. I'm guessing that they'll settle for somewhere around $.20-.25 on the dollar and the union will still have controlling interest.

No way does this go to a traditional bankruptcy hearing. Obama owes the UAW far too much to let that happen.

28 posted on 04/28/2009 11:03:17 AM PDT by Big_Monkey
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To: Oldexpat

Generally, bond holders go to the front of the line. A Bond is a form of contract, between the company and the bond buyer. Suppliers come next. Employees and stockholders figth for what is left.

You surely don’t expect the UAW, which because of their unsustainable contracts, caused the problems, to take over the company.

Who will buy their Volgas? Speak up.


29 posted on 04/28/2009 11:03:21 AM PDT by Tarpon (You abolish your responsibilities, your surrender your rights.)
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To: Petronski

No, it is not “legal”!

But:

“Welcome to New Kenya, where the law of the jungle has replaced the Law of the Land”


30 posted on 04/28/2009 11:03:54 AM PDT by Texas Fossil (The last time I looked, this is still Texas where I live.)
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To: Kieri

What’s good for GM is good for America...................


31 posted on 04/28/2009 11:06:45 AM PDT by Red Badger (If Keynesian economics worked, Zimbabwe would be a superpower.......................)
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To: Tarpon

Couldn’t the bondholders force GM into bankrupcy rather than being defrauded like this?


32 posted on 04/28/2009 11:07:37 AM PDT by Ford4000
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To: Big_Monkey
These are astute bond holders.

They are anticipating a collapse of General Motors and have rightly figured that they could get far more than 10 cents on the dollar even if they just sell off the company's real estate holdings.

33 posted on 04/28/2009 11:07:52 AM PDT by Alberta's Child (I'm out on the outskirts of nowhere . . . with ghosts on my trail, chasing me there.)
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To: Ford4000

Probably, that is likely why they said no ...

GM owns an awful lot of salable plant and equipment. Bond holders and the suppliers get first dibs on it. Not the UAW.

My suspicion is Bambi will make them whole.


34 posted on 04/28/2009 11:10:19 AM PDT by Tarpon (You abolish your responsibilities, your surrender your rights.)
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To: Big_Monkey
Obama owes the UAW far too much to let that happen.

Bond holders don't have to agree, but maybe Rahm Immaneul will take Luca Brazzi and make them an offer they can't refuse. "In five minutes, either your brains or your signature will be on that contract."

Ya shudda come to me first, I cudda helped you

35 posted on 04/28/2009 11:10:43 AM PDT by Lonesome in Massachussets (The age of 0bama: the transient ischemic delusions of adequacy decade.)
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To: Melchior

If the government owns a $15 billion stake and the bond holders $27 billion, how do they figure the government is the majority stake holder? Why do the unions get 39% of the company and the bondholders 10%?


36 posted on 04/28/2009 11:11:20 AM PDT by anoldafvet (Proud Member of the Radical Rightwing Extremist Movement)
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To: Alberta's Child

If that deal went through, the union would run the company. That would last about two years at best before they would completely collapse.

I’ve been trying to get a test drive of the Camaro. Been told twice over the past three weeks the car would be in within a day or two. Both dates went by, not in. That is how the company is running now. As far as perhaps getting a super sport, well, no idea when that would ever happen.

I decided to buy a Genesis...told the car would be here within a week.

Vince


37 posted on 04/28/2009 11:14:09 AM PDT by Mouton
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To: MHGinTN

Obama is just keeping a campaign promise to ‘give the wealth to those who created it.” (workers)
The Barbarians are inside the gates.

What does a ‘worker owned society’ look like? I guess we’ll find out.

Never gonna by a GM product again.


38 posted on 04/28/2009 11:14:52 AM PDT by griswold3 (a good story is more compelling than the search for truth)
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To: MHGinTN

Obama is just keeping a campaign promise to ‘give the wealth to those who created it.” (workers)
The Barbarians are inside the gates.

What does a ‘worker owned society’ look like? I guess we’ll find out.

Never gonna by a GM product again.


39 posted on 04/28/2009 11:14:54 AM PDT by griswold3 (a good story is more compelling than the search for truth)
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To: Tarpon

Actually in a bankruptcy proceeding...wages and then pensions are first in line. The bondholders will deal...just like Chrysler’s have at the 11th hour.


40 posted on 04/28/2009 11:15:04 AM PDT by nyconse (When you buy something, make an investment in your country. Buy Amrican or bye bye America)
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To: Alberta's Child

‘These are astute bond holders’

McCotter is trying to determine which bond holders bought Credit Default Swaps on their bonds from AIG to make them whole if GM fails. (JP Morgan, Goldman Sachs?)
The Taxpayers would still be taken to the cleaners.


41 posted on 04/28/2009 11:17:19 AM PDT by griswold3 (a good story is more compelling than the search for truth)
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To: Kieri

Is the Feds total investment in GM at this point $17 billion? I can”t remeber exactly.

At any rate for roughly $17 billion the Feds get 50%, for $10 billion the UAW gets 39%, and for roughly $24.3 billion (90% of $27 billion) the bondholders get 10%???????

Welcome to Amerika, comrade.

The bondholders have no choice but to force GM’s hand. Bankruptcy would be much more equitable. Clearly robbery such as this is but one of the many reasons we can’t allow our benevolent leaders to come to our rescue.


42 posted on 04/28/2009 11:28:39 AM PDT by bereanway (Sarah get your gun)
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To: Kieri

They need to reject it, it’s a raw deal for them, a sweetheart deal for the UAW!


43 posted on 04/28/2009 11:30:37 AM PDT by dawn53
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To: nyconse
I participated in one bankruptcy, and outstanding, unpaid wages went first, claim on cash on hand and unsold finished goods. The bond holders and suppliers came next, since they essentially lent cash money.

Pensions generally depend on a going concern for their continuance. There just isn't enough money without the business continuance. I bet this is why the union is being given the majority ownership stake ... Who bails out all the other companies who went broke.

Obviously the bond holders have some power, they said NO. Whether they settle at the 11th hour, up to them, they can do what they want, or are forced to do.

44 posted on 04/28/2009 11:34:44 AM PDT by Tarpon (You abolish your responsibilities, your surrender your rights.)
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To: griswold3

“Never gonna by a GM product again.”

Obama’s goons will force you to or to the re-education camp you go — in a GM truck.


45 posted on 04/28/2009 11:35:43 AM PDT by Londo Molari
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To: Kieri
File for bankruptcy or die gm... it matters not... I am through with you after a lifetime of buying your offerings. Never again!

LLS

46 posted on 04/28/2009 11:36:04 AM PDT by LibLieSlayer (hussein will NEVER be my President... NEVER!!!)
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To: YOUGOTIT
I do not think that I will ever again buy a GM car.

We own four now - Corvette, pickup, Blazer, and Suburban. It'll be Toyotas from now on.

47 posted on 04/28/2009 11:40:10 AM PDT by gieriscm (07 FFL / 02 SOT - www.extremefirepower.com)
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To: griswold3
I have never heard of “Credit Default Swaps “.My Father-in-Law died this March. I do not know what happened, all his life he was very astute when it came to stocks. It came as a shock to us when we found out how heavily invested he was in GM. Bonds and stock (preferred). A friend at the brokers said that he “did not want to sell short”. I think that my Father-in-Law thought that he still had the time to change some things with his finances when he passed.
48 posted on 04/28/2009 11:46:00 AM PDT by Irish Eyes
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To: Kieri

The UAW may do well in the final looting, but GM is a corpse going forward. The government is incapable of producing a product that anyone wants, and the UAW has bled it’s host into a coma from which it will not return.


49 posted on 04/28/2009 11:47:07 AM PDT by throwback
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To: Kieri

No one is discussing what will happen to the dealers.


50 posted on 04/28/2009 11:48:40 AM PDT by razorback-bert (We used to call them astronomical numbers. Now we should call them economical numbers.)
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