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AutoBlog: REPORT: GM bondholders give go-ahead to revamped deal, bankruptcy still expected

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Filed under: Government/Legal, GM, Earnings/Financials

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Yesterday, General Motors and its bondholders had officially called it quits, and GM was headed for a certain and certain-to-be-rocky bankruptcy. Today, according to a company filing, The General and the necessary chunk of its bondholders have come to an agreement, and the company looks to be headed to a slightly less rocky bankruptcy.

CNN explains that a block of major bondholders holding about $5.5 billion in GM debt had been offered 10% of the company in exchange for their paper. One of the sweeteners that finally got the bondholders to swallow the medicine was offering them the chance to buy another 15% of the new, post-bankruptcy company "at a low price."

The other: GM won't have to repay any of the government loans it has received or that it will receive in bankruptcy, with the government taking a 72.5% stake in the company instead. The relief to the balance sheet also helped sway the bondholders. In the interim, the UAW will get a 17.5% stake, with the bondholders getting the rest. The bondholders had to agree not to fight the bankruptcy in court. Bondholders have until Saturday afternoon to officially declare their acceptance of the deal.

It has been presented up to now that the lack of a bondholder agreement is what kept GM headed toward bankruptcy. Yet even though GM supposedly has an agreement, it is still widely expected to declare bankruptcy next week. The company needs to shed its anchors and barnacles quickly - and it appears it will still take a BK will do that.

[source: CNN]

REPORT: GM bondholders give go-ahead to revamped deal, bankruptcy still expected originally appeared on Autoblog on Thu, 28 May 2009 14:00:00 EST. Please see our terms for use of feeds.

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And here we have the death of GM. No last will and testament written, few people at its bedside in mourning, nothing left but a corpse that's going to be used for scientific purposes.

Every time I'll see a vehicle built by GM in the future that I just know that was directly approved and contrived by the government, I'll puke.

Edited by YellowJacket894
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And here we have the death of GM. No last will and testament written, few people at its bedside in mourning, nothing left but a corpse that's going to be used for scientific purposes.

Every time I'll see a vehicle built by GM in the future that I just know that was directly approved and contrived by the government, I'll puke.

Well, the current GM will die and a "new" one comprised of all their money-making assets will hopefully emerge after not too long. Whether or not the new company is actually competitive is a different story.

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The government is not going to have that much control over GM. I'm sorry, but you think the government is going to want to be responsible for making GM fail because they controlled it.

Besides, the government basically controls most of Lockheed, Boeing and many other companies with their constant infusion of cash for defense spending.

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