Skip to comments.GM Bondholders Reject Debt-Swapping Offer
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.
‘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.
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.
They need to reject it, it’s a raw deal for them, a sweetheart deal for the UAW!
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.
“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.
We own four now - Corvette, pickup, Blazer, and Suburban. It'll be Toyotas from now on.
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.
No one is discussing what will happen to the dealers.
I would bet money that the Chinese would pay about what the bonds are worth to own Buick and GM properties in China.
What would happen if the bondholders accepted the current proposal is that the UAW would demand the closing of overseas plants such as China and the Chinese would buy the closed plants dirt cheap and undercut the price of UAW made cars in the States.
The Bond holders have nothing to gain from the Obama seizure.
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.
I'd be REALLY nervous about what Credit Default Swap / Reinsurance options were on the table regarding GM, bankruptcy and sitting over in say ... AIG's portfolio of contracts right about now.
I'd also bet these bondholders have hedged against this.