Bondholder group reaches deal?

[rickaren]

Bondholder group reaches deal for up to 25% of GM

Posted Thursday, May 28, 2009, 11:53 am in Employee News

General Motors Corp. said Thursday that a group representing many of its largest bondholders had accepted a proposal offering as much as a 25 percent stake in exchange for not opposing G.M.’s reorganization plan, the New York Times reported.

Under the terms of the deal, GM would sell itself in Chapter 11, and bondholders would receive a 10 percent stake in the newly reorganized company in exchange for about $27 billion in bonds, the Times said. They also would receive warrants to buy an additional 15 percent of a new GM, exercisable if GM’s value rises to certain levels, the paper reported.

GM said in the regulatory filing that the proposal depends on the government getting enough bondholders to make statements of support backing the terms of the swap. Without those statements, which are due by Saturday, the amount of stock and warrants for bondholders would be “substantially reduced or eliminated,” the Times said. The group, representing holders of about 20 percent of the bonds’ value, had already said they support the proposal, GM said.

Earlier this week, bondholders overwhelmingly rejected a debt exchange offer that would have swapped their bonds for 10 percent of the company’s equity, the paper said. It is believed that GM’s bonds are held by tens of thousands of investors, ranging from institutions to individuals, the story said. (The New York Times)