GM Bondholders Support Revised Bond Swap Offer

[IrishBuckeye]

Source: CNBC

A group of major General Motors bondholders on Thursday gave its support for a revised bond exchange, saying the option of litigation in bankruptcy court was too risky.

The Ad Hoc Committee of GM bondholders supports the revised offer from GM and believes that when contrasted with the alternative—uncertain and costly bankruptcy court litigation—that it represents the best alternative for bondholders in the current difficult and dire situation," the committee said in a statement.

Since the first offer was made on April 27 for bondholders of $27 billion of debt to accept a 10 percent equity stake for those claims, "circumstances have materially changed that make today's offer more attractive," the statement said.



Read more: http://www.cnbc.com/id/30980818

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Don't count the General out quiet just yet...

[tomm2thumbs]

1. Bondholder Group Reaches Deal for Up to 25% G.M. Stake

Source: NY Times

General Motors said Thursday that a group representing many of its largest bondholders had accepted a proposal offering up to a 25 percent stake in exchange for not opposing G.M.’s bankruptcy reorganization plan. Under the terms of the deal, G.M. would sell itself in Chapter 11 and bondholders would receive a 10 percent stake in the newly reorganized company in exchange for about $27 billion in bonds. They would also receive warrants to buy an additional 15 percent of a new G.M., exercisable if G.M.’s value rises to certain levels.

“The ad hoc committee of G.M. bondholders supports the revised offer from G.M. and believes that when contrasted with the alternative — uncertain and costly bankruptcy court litigation — that it represents the best alternative for bondholders in the current difficult and dire situation,” the group said Thursday in a statement.

Earlier this week, bondholders overwhelmingly rejected a debt exchange offer that would have swapped their bonds for 10 percent of the company’s equity. It is believed that G.M.’s bonds are held by tens of thousands of investors, ranging from institutions to individuals.

Read more: http://www.nytimes.com/2009/05/29/business/29auto.html?hp

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other:

Thursday’s announcement came after German and American negotiators in Britain failed to agree on a crucial bridge loan to sustain Opel and the rest of the European operations of General Motors in the event of a bankruptcy filing.

[dipsydoodle]

2. So in other words

despite their rhetoric they chickened out.

[jimnasium]

3. they had no chance of winning.

When it comes down to it, GM doesn't belong to them anymore.

That's the risk you take when you invest.

[dipsydoodle]

4. jimnasium !

:rofl:

very cute :hi:

[WriteDown]

5. Actually, its not...

Bankruptcy would allow the assets to be sold off and they'd get "something." 25 cents on the dollar may be what they were expecting or very close to it. Its a lot better than the 10% they were originally offered.

[Psephos]

7. Bondholders don't "invest." That would be stockholders.

Bondholders loan money to finance operations, expansion, research, etc. Compared to stockholders, they receive a lower rate of return on the money they loan because it's protected by collateral. They have a contractual right to be paid first in event of bankruptcy.

That right is being trampled.

Nothing good is going to come from this in the longer term, either for GM or for the politicians responsible for it.

[hugo_from_TN]

6. Actually, the bondholders forced a better deal out of GM and the administration.

[spinbaby]

8. I have a question

About a year ago, there were ads on TV offering something over a 5% return on an "investment" with GMAC. Were these GM bonds or something else?