GM Bondholders Reject Offer; Bankruptcy Filing Imminent
By Michelle Krebs May 26, 2009General Motors has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the largest-ever U.S. industrial bankruptcy by the end of this month, Reuters reports.
GM failed to gain anywhere near the 90 percent of bondholder support needed, sources told the newswire Tuesday. Bondholders have until midnight to make their final decision on the tender. As of midday Tuesday, the company had only "low-single-digit" interest from bondholders, one source said.
Reuters' sources said GM will likely file for bankruptcy some time after midnight Tuesday, but before June 1.
GM's bondholders are balking at the automaker's offer to reduce its $27 billion debt in exchange for a 10-percent stake in the restructured company, a stake smaller than that being given to the United Auto Workers union.
Indeed, the UAW told its representatives gathering in Detroit Tuesday that the union, through its retired employee health-care fund, would own 17.5 percent of GM. The union would receive the company stake in lieu of the full $20 billion GM owes the fund, though GM would still make some cash payments.
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