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Obama readies auto aid; GM bondholders get offer

March 28, 2009

Obama readies auto aid; GM bondholders get offer


After briefings with President Barack Obama this week, his auto task force met Friday, "winding down the decisions that have to be made" about the U.S. auto industry, White House spokesman Robert Gibbs said.

Obama is to unveil the latest government plan for aiding Detroit on Monday.

Meanwhile, General Motors Corp. continues working toward a resolution with its bondholders, making a new offer to restructure its debt earlier in the week, a person familiar with the talks said Friday.

The proposal came after representatives for the bondholders committee negotiating with GM complained Sunday that the company and Obama’s task force had not responded to their offer to meet the requirements of the $13.4-billion government loan keeping the automaker afloat.

GM must try to shed two-thirds of its unsecured debt and get the UAW to accept half of the money owed to it for the retiree health care trust in the form of company stock.

While bondholders have been criticized for resisting those efforts, the debt holders have said they want a fair deal.

CNBC reported Friday that bondholders were offered two choices: One that involved 8 cents on the dollar in cash, 16 cents in new unsecured debt and a 90% stake in GM.

The other option is unclear, CNBC said, but includes a 90% equity stake.

The Detroit automaker is also said to have offered the UAW $10 billion in preferred stock and $10 billion in cash for the retiree health care trust. The union is owed $20 billion in cash.

A GM spokeswoman declined comment beyond saying the company continues talks and no agreement has been reached.

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