GM steers toward bankruptcy

Would be the largest industrial bankruptcy in U.S. history

By MSN Money May 27, 2009 5:34PM

GM © Frank Rumpenhorst/dpa /LandovGeneral Motors (GM, news, msgs) is in the spotlight again today.


GM bondholders, who hold $27 billion in unsecured debt from the company, rejected a debt-for-stock exchange, putting the automaker a step closer to bankruptcy.


The automaker needed more than 90% of the bondholders to agree to an exchange in which they would swap $1,000 of the debt for 225 shares of the company, getting a 10% stake in a reorganized GM. But the deal was accepted by "substantially less than the amount required," GM said.


GM said that any accepted offers will be returned to bondholders unconsummated.


GM shares fell 17.4% to $1.19 this afternoon. The percentage loss was the largest among the 30 Dow stocks.


The automaker now only has three business days before the government-imposed deadline to get its bondholders to agree to a deal, but that doesn't seem likely.


GM needed concessions from them, as well as from the United Auto Workers union, as a condition of the $19.4 billion in federal loans the automaker has received since December. GM chart


Earlier on Tuesday, members of the UAW agreed to take a smaller 17.5% stake in a reorganized company. The Treasury Department is reportedly going to back GM with $50 billion to help finance the company's restructuring, but the government could demand up to 70% of GM stock in exchange.



Observers had expected the union to end up controlling 39% of the automaker, with the government controlling 50% of the company.


A GM bankruptcy would be the largest industrial bankruptcy in U.S. history.


In related news, Chrysler hopes to emerge from bankruptcy as early as next week, according to published reports.

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.



Quotes delayed at least 15 min
Sponsored by:


There’s a problem getting this information right now. Please try again later.
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).

Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More


There’s a problem getting this information right now. Please try again later.
Sponsored by: