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GM Bondholders Turn Down Debt Swap

General Motors failed in its attempts to trade bondholder debt for shares in the automaker, the company announced Wednesday morning.

The defeat, while not surprising given bondholders' criticisms of the proposal, makes bankruptcy even more likely.

Getting unsecured debt holders to accept a 10 percent stake in GM in exchange for the $27 billion they are owed was a key part of GM's plans to restructure its debt outside of court.

President Barack Obama has given GM until Monday to restructure or else it faces bankruptcy reorganization. GM is surviving on $19.4 billion in federal loans.

The deadline for tendering the debt was late Tuesday night.

"The principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury , to meet the debt reduction objectives under its viability plan, or to meet the minimum tender condition of the exchange offers as required by the U.S. Treasury," the company said in a statement.

GM said its board of directors will meet to discuss GM's next step.

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