GM Bondholders: We're Working To Avoid Bankruptcy
March 16 2009 - 9:21PM
Dow Jones News
A group representing General Motors Corp. (GM) bond holders said
Monday it has been willing to cut a deal with the struggling auto
maker that would help avoid a bankruptcy, comments that come after
an advisor to President Barack Obama's autos task force said the
committee was being "quite difficult."
The group, in a statement released Monday night, said several
weeks ago it presented a proposal for a debt swap which fell in
line with terms set by the U.S. government when it loaned GM $13.4
billion to stay afloat. The loan requires a deal with bondholders
to convert about two-thirds of GM's $27 billion debt into
equity.
Bondholders have argued they're being asked to sacrifice more
that the United Auto Workers, which is in parallel negotiations
with GM over reducing the auto makers obligations to retirees.
Without debt-reducing deals with the union and bond holders, GM
will have a much tougher time convincing the government to grant
it's request for an additional $16.6 billion in loans.
But GM has been locked in negotiations with both groups and was
unable to reach tentative deals with either by a Feb. 17 deadline
set by the government. The auto maker now has until March 31 to
have a final deal under terms of the loans.
The deal put forth by the bondholders "provides the best chance,
given the parameters set forth in the plan, of completing an
out-of-court restructuring by securing a high level of acceptance
among a diverse group of GM bondholders - from mutual funds to
pension funds to retail bondholders," the group said in a
statement. "We stand ready to do our part to bring about a workable
solution."
Steven Rattner, a lead advisor to the autos task force, said in
an interview with the Detroit Free Press that the bondholders were
hampering the auto maker's recovery, calling the group "quite
difficult."
-By Sharon Terlep; 248-204-5532; sharon.terlep@dowjones.com.