WARREN, Mich. — Individuals who hold General Motors Corp. bonds said Wednesday they want a better deal than the debt-for-equity swap the company is offering.
At a news conference in the Detroit suburb of Warren, several bondholders from as far away as Colorado said holding stock in a newly restructured GM doesn’t compare to the bond interest payments they rely on to supplement their retirement or pay their property taxes or medical bills.
They also said they can’t afford to lose the principal they lent to the company.
"We’re concerned that small bondholders like ourselves have been left out of the dialogue,” said Dennis Buckholtz, who lives in Warren. "That doesn’t seem fair.”
GM is offering bondholders 225 shares of stock for every $1,000 in bonds, but analysts say those shares will be diluted when the government and the United Auto Workers union get new equity in the auto company.
About the plan
GM’s plan would give the UAW a 39 percent stake in GM if the union takes about $10 billion in payments to retiree health care trust in stock.
The U.S. government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.
That’s expected to leave the bondholders with just pennies on the dollar for their 10 percent equity stake. Common shareholders would end up with about 1 percent of GM.
GM has until May 26 to convert 90 percent of its $27.5 billion in outstanding unsecured notes so it can receive billions more in federal aid and avoid filing for bankruptcy protection.
Are bonds in danger?
The bondholders assembled at the Warren City Hall, where Mayor James Fouts called their plight "fundamentally undemocratic.”
At a news conference in the Detroit suburb of Warren, several bondholders from as far away as Colorado said holding stock in a newly restructured GM doesn’t compare to the bond interest payments they rely on to supplement their retirement or pay their property taxes or medical bills.
They also said they can’t afford to lose the principal they lent to the company.
"We’re concerned that small bondholders like ourselves have been left out of the dialogue,” said Dennis Buckholtz, who lives in Warren. "That doesn’t seem fair.”
GM is offering bondholders 225 shares of stock for every $1,000 in bonds, but analysts say those shares will be diluted when the government and the United Auto Workers union get new equity in the auto company.
About the plan
GM’s plan would give the UAW a 39 percent stake in GM if the union takes about $10 billion in payments to retiree health care trust in stock.
The U.S. government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.
That’s expected to leave the bondholders with just pennies on the dollar for their 10 percent equity stake. Common shareholders would end up with about 1 percent of GM.
GM has until May 26 to convert 90 percent of its $27.5 billion in outstanding unsecured notes so it can receive billions more in federal aid and avoid filing for bankruptcy protection.
Are bonds in danger?
The bondholders assembled at the Warren City Hall, where Mayor James Fouts called their plight "fundamentally undemocratic.”
The investors flanking the mayor held signs asking President Barack Obama and the auto task force to meet with them and honor their investment. They also said they hoped GM would avoid a bankruptcy filing, as their bonds — if they choose not to exchange them — would be in jeopardy.
by the associated press
by the associated press
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