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| GM bondholders clear bankruptcy plan: report |
| Press Trust of India / New York May 31, 2009, 17:37 IST |
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Bondholders of General Motors have agreed to exchange their debt for an ownership stake as high as 25 per cent in the struggling US automaker, media report says.
"General Motors' bondholders finished voting Saturday on the company's plan to exchange their debt for an ownership stake as high as 25 per cent in GM, the final obstacle to an orderly bankruptcy for the ailing carmaker," the New York Times reported.
Bondholders would initially get a 10 per cent stake, along with warrants for 15 per cent.
Citing people familiar with the matter, the newspaper said, "Bondholders with slightly more than 50 per cent of GM's $27.2 billion in bond debt agreed to support the plan."
GM had offered the bondholders the opportunity to take a larger stake in the company after they had overwhelmingly rejected a previous exchange offer.
Having at least half of them agree to support the swap would allow GM to file for bankruptcy protection tomorrow and expect an easier restructuring, the report said.
Under the restructuring plan, the United Automobile Workers union, through its retiree health care fund, would receive a 17.5 per cent stake in the new GM and warrants to buy an additional 2.5 per cent.
After the restructuring, the federal government could own as much as 70 per cent of the company.
The Treasury Department which has lent GM about $20 billion since December, required the company to make deals with the union and bondholders to cut debt and expenses by June 1, the report said.
GM is expected to make its bankruptcy filing tomorrow, a plan which would provide billions of dollars more in federal funds to the ailing auto maker. Its rival Chrysler filed for Chapter 11 protection there on April 30.
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