- The Washington Times - Sunday, May 31, 2009

DEVELOPING:

WASHINGTON, May 31, 2009 (AFP) — Ailing General Motors moved closer Sunday to its expected bankruptcy filing as company bondholders approved a government-sponsored debt for equity deal, The New York Times reported.

The bondholders had until 5 p.m. Saturday to indicate whether they supported the group’s new offer ahead of the once mighty corporation’s looming bankruptcy.

The government’s rescue plan for GM could put as much as 72.5 percent of the country’s biggest automaker under state ownership.

Citing “people briefed on the matter,” the newspaper said the bondholders with slightly more than 50 percent of GMs 27.2 billion dollars in bond debt agreed to support the plan by the government-set deadline.

Among the backers was a committee of large investors holding about 20 percent of GMs outstanding bonds, The Times said.

No official announcement of the vote tally has yet been made.

Under the plan, the bondholders would obtain the rights to buy an extra 15 percent of GM’s stock at a low price. They would also control 25 percent of the “new GM,” after having supported the new company’s creation in bankruptcy court.

Recalcitrant bondholders who opt for confrontation rather than cooperation “will get nothing or very little,” an Obama administration official told reporters Thursday.

Government-backed restructuring in bankruptcy court for GM, once the world’s largest automaker, appeared all but certain ahead of a Monday deadline imposed by the Obama administration on the company to submit a viable restructuring plan or file for bankruptcy.

It could take place as early as Sunday.


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