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GM bondholders seek control

Posted Friday, May 1, 2009, 11:52 am in Employee News

Bondholders would become General Motors’ majority owner under a counter-proposal to restructure the troubled automaker’s debt unveiled yesterday by the committee representing the creditors, the Detroit Free Press reported.

The committee is proposing “allocating new GM equity equally across the board to union VEBA and GM bondholders, pro rata to the level of financial obligation owed to each by GM,” a statement said. VEBA refers to the voluntary employee beneficiary association to be set up to oversee UAW retiree health insurance.

Bondholders, who have $27 billion in unsecured notes, would get 58 percent of a reconstituted GM, the Free Press said. The UAW’s retiree health care trust, which is currently owed about $20 billion in obligations, would get 41 percent of GM and current shareholders would be left with 1 percent, the paper said. The U.S. government, which has so far lent GM $15.4 billion, would not get a stake, according to the paper. (Detroit Free Press)
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