General Motors set back.
General Motors has failed in its bid to have bondholders swap debt for equity, and may file for bankruptcy by Friday.
GM needed the support of 90 per cent of the bondholders to swing the deal – which would have given them 10 per cent of the auto giant — but reports overnight suggested acceptance was in the ‘single digit’ region.
The failure was a serious setback for the carmaker, after United Automobile Workers union leaders recommended their members agree to a deal that would slash GM’s debt to a retiree health care trust fund.
Under that arrangement, GM would have given the UAW 17.5 per cent equity in a restructured company, later rising to 20 per cent if the share price improved, with the addition of another US$6.5 billion worth of preferred stock and a US$2.5 billion note.
It is expected that GM will make a move before the June 1 deadline for restructuring.
