GM Bondholders Vote on Sweetened Deal
General Motors faced its last obstacle to a quick and orderly bankruptcy yesterday, as its lenders voted on exchanging their claims for a stake in the restructured automaker.
Under orders from the Treasury Department, the company offered bondholders a 10 percent stake in the new GM, and has added to the offer warrants for another 15 percent stake. In voting to accept the proposal, bondholders would also agree not to oppose GM should it pursue a sale under Section 363 of the bankruptcy code, which allows the automaker to sell its assets and create a new company.
Administration officials were confident many of the bondholders would accept the sweetened deal, especially after the informal committee of lenders had agreed to it. "This new offer we believe has a greater chance of success," an administration official said.
Small individual bondholders, who represent a fifth of the $27.2 billion in unsecured debt, were shut out from voting on the offer.
The "Main Street Bondholders," representing some of those individuals, said the deal unfairly gave the United Auto Workers' retiree health-care trust fund 66 cents on the dollar, while offering bondholders 13 cents on the dollar, assuming the new GM is worth $25 billion. This group of bondholders vowed to fight back using a section of the bankruptcy code, which could give them their own standing.
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