Reading it so that the gov't will "agree" to get its uber-secured loan equitized, killing any negotiating power for all other unsecured bondholders.
Bondholders will be not be happy.
Time to bring out the equitable subordination lawyers boys.
By Linda Sandler, Rebecca Christie and Jeff GreenSphere: Related Content Print this post
April 13 (Bloomberg) -- The U.S. government is consideringtaking an equity stake in a stripped-down General Motors Corp.in a swap for some of the $13.4 billion the carmaker owes theTreasury, people familiar with the matter said.
A government stake would be part of an effort to cut GM’sdebt and would limit the payouts to bond owners as the carmakerapproaches a June 1 deadline to come up with a plan to becomeviable. Bondholders, who own $27.5 billion in GM debt, earlierwere offered 90 percent of the new entity’s equity.
“It’s hard to have negotiating leverage when thegovernment and the public opinion is lined up against you,”said Richard Hahn, co-chair of the bankruptcy practice atDebevoise & Plimpton LLP, a New York law firm.
Bankers and other GM advisers are working to estimate howmuch a restructured company, consisting of only profitable GMassets, might be worth in a debt-for-equity swap, said thepeople, who declined to be named because discussions areprivate.