May 28, 2009
GM bondholder committee agrees to terms
An Ad Hoc Committee of General Motors Corp. bondholders said they would support a new government offer that increases their stake in a restructured GM.
The Obama administration's new deal included offering creditors 10 percent of GM and warrants to allow them to increase their stake to 25 percent, the Detroit Free Press reported Thursday.In a statement, the committee, which represents about 20 percent of GM's outstanding debt, said,
rejecting this offer in the expectation that the bondholders will do better in a litigated outcome was a risk the Committee is unwilling to take.
Accepting the offer formally came with the government stipulation that bondholders agree not to contest the deal in bankruptcy court. The offer, which expires 5 p.m. Saturday, is contingent on a
satisfactory number of bondholders agreeing to the plan, GM said.
The plan includes the U.S. and Canadian governments owning 72.5 percent of the restructured company, with the U.S. government controlling the lion's share.
Bondholders previously rejected an offer to swap debt for 10 percent of the company.
The deadline for GM to avoid bankruptcy is June 1. After that, without a viable financial plan, the government said it would cut GM off of further emergency assistance.