DETROIT – An ad hoc committee of General Motors Corp. bondholders expressed support for 10 percent of the restructured auto maker under a revised plan.
The new proposal, contained in a regulatory filing Thursday, envisions an initial 72.5 percent stake in a new GM being held by the U.S. Treasury in return for enhanced aid, The Wall Street Journal reported. Under the deal, GM’s union-run health trust would receive 17.5 percent, with 10 percent going to creditors – in line with the offer the bondholders rejected Tuesday – though warrants could lift this to 15 percent.
The committee said the Treasury’s agreement to inject additional funds into GM and convert about $40 billion of those funds into stock improves the company’s balance sheet substantially. The committee also cited the prospect of uncertain, costly litigation if bondholders rejected the restructuring proposal. The committee represents 20 percent of the unsecured bondholders.
The auto maker is expected to file for bankruptcy protection by Monday. GM told bondholders they could be wiped out if they don’t accept an offer for by a 5 p.m. deadline Saturday.
The Canadian government and the province of Ontario are slated to receive some equity and preferred stock in return for debt financing.
The filing Thursday didn’t mention existing ordinary shareholders, who were originally due to receive 1 percent in a new GM, though the company’s shares jumped in early trading.
As part of the deal, bondholders wouldn’t oppose GM’s plans, should it enter bankruptcy, to sell bad assets.
The company’s U.S. workers are voting Thursday on contract amendments, while the German government has delayed until Friday a decision on supporting a partial buyout of the company’s European operation.
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