General Motors and the US Treasury on Thursday made an improved equity exchange offer to bondholders with US$27bn (GBP16.9bn) in debt intended to pave the way for a quick bankruptcy process for the automaker. Under the proposed deal, which GM said was supported by creditors representing about 20% of its debt, bondholders would be offered 10% of a reorganised company and given warrants to purchase another 15%.
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In exchange for the improved payout [previously capped at 10% with no further purchase option], creditors would agree not to oppose a move to sell GM’s profitable assets to a new company funded by the US government in a fast-track bankruptcy process, Reuters reported.
The exchange offer would be open to bondholders until 5pm Saturday EDT, GM said.
The US Treasury would own 72.5% of the ‘new’ GM coming out of a bankruptcy sale process, while a trust affiliated with the United Auto Workers union would own 17.5%, GM said in a filing with securities regulators.
Bondholders rejection will bankrupt GM
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