Thursday, April 16, 2009

GM To Announce Bond Exchange By April 27

From Bloomberg:

April 16 (Bloomberg) -- General Motors Corp. is planning to make a formal offer to all bondholders by April 27 to exchange their $27.5 billion in claims for equity, according to a person
with knowledge of the discussions.

GM, facing a June 1 U.S.-backed bankruptcy, was told this week by President Barack Obama’s auto task force to try to restructure its debt out of court, said people familiar with the
matter, who asked not to be identified because the talks are private.

The Detroit-based automaker is planning to announce the offer no later than April 27, because the U.S. Securities and Exchange Commission requires that investors have a month to decide whether to participate, according to one of the people.

Bondholders may also be offered accrued interest in cash, though the terms of the new exchange are preliminary, the person said.

The Obama administration said last month that GM’s plan to return to profit wasn’t aggressive enough and ordered new Chief Executive Officer Fritz Henderson to cut its debt by more than
initially demanded. GM is trying to prove it’s viable, a U.S. requirement to keep $13.4 billion in federal loans. The original loan terms called for GM to slash two-thirds of its bonds through a debt-for-equity exchange.

“A successful bond exchange is an essential element of our restructuring efforts, and we are working aggressively to launch the exchange,” Renee Rashid-Merem, a GM spokeswoman, said.
“However we won’t speculate on timing or terms of the transaction.”

A spokeswoman for the U.S. Treasury, Jenni Engebretsen, didn’t immediately respond to an e-mail. Sphere: Related Content
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