GM bondholders present plan for out-of-court restructuring

GM bondholders present plan for out-of-court restructuring
 

Details of the plan not disclosed

Automotive News | March 16, 2009 – 9:00 pm EST

 

DETROIT (Reuters) — Advisers to General Motors’ bondholders said today they have presented a framework plan to President Barack Obama’s autos task force and the company that provides GM’s best chance for an out-of-court restructuring.

In a statement, advisers to the ad hoc committee of GM bondholders said the framework plan for a debt-to-equity exchange was "consistent with the government’s restructuring requirements under the terms" of emergency government loans provided to the automaker.

"It (the framework) provides the best chance … 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 statement added.

The plan, which was presented to the autos task force and GM several weeks ago, "is one of several options on the table that seeks to achieve a successful out-of-court restructuring," the statement said.

GM bondholders face pressure under the terms of the automaker’s bailout from the U.S. government to reduce by two-thirds the roughly $27 billion they are owed, through an exchange for new equity in a recapitalized company.

Bondholders have balked at those proposed terms, saying they are unfair given the payout terms being offered to workers represented by the United Auto Workers union and the remaining debt at GM.

GM and No. 3 U.S. automaker Chrysler LLC face a March 31 deadline when the autos task force must decide whether the companies can be restructured successfully.

GM has received $13.4 billion in emergency government loans and Chrysler has taken $4 billion so far. Both automakers have requested additional billions of additional dollars in loans to help them stave off bankruptcy.

The U.S. auto industry is suffering from its worst downturn in decades, with industrywide sales down more than 40 percent in February.

Statement from the advisors to the ad hoc committee of GM bondholders:

Several weeks ago we presented the President’s auto task force and GM management with a framework for constructing a successful debt-to-equity exchange. The framework we proposed meets two important objectives. First, it is consistent with the government’s restructuring requirements under the terms of the bridge loan. Second, it 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 framework we set forth is one of several options on the table that seeks to achieve a successful out-of-court restructuring, and we look forward to discussing the merits of any proposal that brings about the fundamental changes necessary to position GM for long-term success. We continue to believe that the best result for all stakeholders – and for the American economy – is a viable, competitive GM. We stand ready to do our part to bring about a workable solution.

As such, we are eager to continue our discussions with both GM and the auto task force.

Share
Seniority Lists
Recent Posts!
Bargaining Committee

Chairman
Mike Herron
President
Tim Stannard
Zone at Large – 1st
Danny Taylor
Zone at Large – 2nd
Mark Wilkerson
Committeepersons
Joe McClure
Chad Poynor
Steve Roberts
Derek Lewis
Bill Cundiff
Kirk Zebbs
Don Numinen
Jay Minella
Danny Bragg
Chris Hill
Rashad Thomas
Keith Oswald
Chris Brown

1853 Officers

President
Tim Stannard
Chairman
Mike Herron
Vice President
Darrell DeJean
Financial Secretary
Mark Wunderlin
Recording Secretary
Peggy Mullins
Trustee (3)
Jay Lowe
Dave Clements
Dave Spare
Sgt. at Arms
David C Spare
Guide
Ashley Holloway
E-Board at Large (2)
David Ryder
Steve Roberts
GM Unit Chair
Mike Herron
Leadec Unit Chair
Larry Poole
Ryder Unit Chair
Patrick Linck
AFV Unit Chair
Neil Osborne
Retiree Chair
Mike Martinez

Get Text Alerts



asdasdsd

*Standard text messaging rates may apply from your carrier