A majority of General Motors' bondholders agreed to exchange their debt for an ownership stake as high as 25 percent in G.M., the final obstacle to an orderly bankruptcy for the ailing carmaker. Holders of about 54 percent of G.M.'s $27.2 billion in bond debt, agreed to support the plan by the deadline of 5 p.m. Saturday, according to a spokesman for a committee representing some of G.M.'s largest bondholders, which negotiated the deal with the government. All told, 975 investors expressed support for the plan.
According to the spokesman, 20 percent of the support for the plan came from the ad hoc bondholders committee. Another 15 percent came from bondholders who had supported earlier G.M. offers and 19 percent from investors who gave their support between Thursday and Saturday.
But groups representing some of G.M.'s retail bondholders -- individual investors who purchased the company's bonds for as little as $25 a piece -- said they still planned to contest the reorganization plan.
"Regardless of the outcome of the General Motors and the government's 'offer' to G.M. bondholders," the group, G.M. Bondholders Unite, said in a statement that "its members are more committed than ever to stand up for their legal rights."
It is not known how many of these individual investors there are, but some estimates place their holdings of G.M.'s $27.2 billion in bonds at more than 25 percent.
The government had been looking for holders of about 50 percent of G.M.'s bonds to support the exchange, according to people briefed on the matter. By agreeing not to contest G.M.'s restructuring plan
These bondholders agreed not to contest G.M.'s restructuring plan in court, allowing the carmaker to file for bankruptcy on Monday with one less worry. G.M. offered the bondholders the opportunity to take a larger stake in the company after they overwhelmingly rejected a previous exchange offer.
G.M. has scheduled a news conference with its chief executive, Fritz Henderson, on Monday in New York, where it is expected to make its bankruptcy filing. Its rival Chrysler filed for Chapter 11 protection there April 30.
Under the restructuring plan, the United Automobile Workers union, through its retiree health care fund, would receive a 17.5 percent stake in the new G.M. and warrants to buy an additional 2.5 percent.
Bondholders would initially get a 10 percent stake, along with warrants for 15 percent.
The Treasury Department, which has lent G.M. about $20 billion since December, required the company to make deals with the union and bondholders to cut debt and expenses by June 1. But the deals are not seen as enough to prevent a bankruptcy. After the restructuring, the federal government could own as much as 70 percent of the company.
G.M. has scheduled a news conference with its chief executive, Fritz Henderson, on Monday in New York, where it is expected to make its bankruptcy filing. Its rival Chrysler filed for Chapter 11 protection there April 30.
SOURCE: NY Times
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