GM Inches Closer To Bankruptcy -- Or Complete Govt. Bailout
UPDATED at 3:25 p.m. with swap-offer results:
Key developments are unfolding today with ailing Detroit automaker and American icon General Motors, each of which is pushing the company toward what appears to be its inevitable bankruptcy.
Or, alternatively, toward a complete government bailout that could involve pouring as much as $30 billion more into the automaker, CNBC auto reporter Phil LeBeau reported moments ago. GM has always received $20.3 billion in government bailout money.
Point is, this week may prove the most crucial in the 112-year history of America's -- and once the world's -- most prominent automaker.
The Wall Street Journal is reporting that the newly restructured GM will have one board member appointed by the United Auto Workers union. Also, the Journal reports, the Treasury Department is insisting on immediate benefit cuts for union employees. According to the terms of the deal the UAW has struck with the government, the union will own 17.5 percent of GM.
Rank-and-file UAW members will vote on the offer over the next few days.
Earlier today, Reuters reported the early results of today's GM bondholders exchange, which is shaping up as the failure that everyone expected it would be.
UPDATE: Reuters is reporting that GM has failed to receive enough interest from bondholders willing to take the debt-for-equity swap.
You may recall from last week that the Mom and Pop GM bondholders, calling themselves the "Main Street GM bondholders," were upset that they carry $7 billion in GM debt and are being offered a small slice of the company's equity in return.
By contrast, the UAW holds a far smaller percentage of GM debt, yet is getting a far bigger slice of company equity (and, the WSJ reports, the board seat).
Today is the deadline for the GM bondholders to exchange their bonds for their (small) stake in company equity.
The swap goes until midnight tonight but early returns, as reported by Reuters, put the percentage of GM bondholders taking advantage of the offer "in the low single digits."
May 26, 2009; 3:25 PM ET
Categories: The Ticker | Tags: GM, Treasury, UAW, main street bondholders
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