As expected, GM’s bondholders rejected the company’s swap offer. Bankruptcy expected this weekend.
NYT: Bondholders at General Motors on Wednesday rejected an offer to exchange $27 billion in debt for a small amount of stock, as G.M. prepared for a bankruptcy filing that could come as soon as this weekend.
The company is expected to spend the next few days finishing its bankruptcy case. One important element before it files is securing the approval by the United Automobile Workers union of a new set of concessions.
Workers are voting on the proposal in meetings on Wednesday. It would form the basis of a labour contract between the union and the new version of G.M. that is expected to emerge from bankruptcy protection.
Meanwhile, the US is preparing to fork over another $50 billion on top of the $20 billion we’ve already given the company. In exchange, we’ll get 70% of the equity. We’ll be behind the bondholders and the union, which will get cash and preferred stock.
So how much money will we be losing instantly?
Depends. To figure that out, we need details on how much revenue the restructured company will be generating, how much debt and preferred stock it will have, and, ultimately, how profitable it will be.
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