paologorgo
Chapter 11
* All-equity conversion for bondholder, UAW debt-sources
* Offer to convert all $48 bln of debt into equity-sources
* Treasury could convert its own loans to GM stock-sources (Adds equity-based plan details, background from comments by GM CEO)
By Soyoung Kim and Emily Chasan
DETROIT/NEW YORK, April 17 (Reuters) - The Obama administration has directed General Motors Corp (GM.N) to prepare a new debt restructuring plan that would convert all of the $48 billion the automaker owes bondholders and its major union into equity, people briefed on the plan said on Friday.
The U.S. Treasury, which has provided $13.4 billion in emergency funding to keep GM operating since the start of the year, has indicated that it could also convert those taxpayer-backed loans into GM stock, the sources told Reuters.
GM plans to make the new proposals to bondholders and the United Auto Workers union within the next two weeks, the sources said.
The sources asked not to be identified because of the confidential nature of the talks between the automaker and President Barak Obama's autos task force, which is charged with retooling the U.S. auto industry.
GM representatives could not be immediately reached for comment. The Treasury Department had no immediate comment.
The proposals emerged after two weeks of intense talks between the autos task force, headed by former investment banker Steve Rattner, and GM executives in Detroit.
The proposed payout to GM's major union and its bondholders in stock alone would represent much deeper concessions for both groups than the terms they had been offered under the GM bailout loans approved by the Bush administration.
"The task force was clear this was the best way for GM to achieve success going forward," said one of the sources.
Under the terms of its former restructuring plan, GM had aimed to cut its roughly $28 billion of bond debt by two-thirds and convert half of the remaining $20 billion it owes to its retiree health care fund in equity, rather than cash.
But the autos task force rejected that plan, saying GM needed to cut more debt from its balance sheet in order to be a profitable company.
GM Chief Executive Fritz Henderson, who assumed the top job in late March when the Obama administration ousted his predecessor, Rick Wagoner, told reporters on Friday that GM management had spent the past two weeks working with U.S. officials on a revised business plan.
That plan, which will include more job cuts and plant closures, will be shared with bondholders and the union as talks on the planned debt restructuring intensify in coming weeks, he said.
It was still feasible for GM to avoid bankruptcy, but Henderson said the automaker was also working on detailed plans for a filing if it is forced to restructure under court protection. (Reporting by Soyoung Kim and Emily Chasan; writing by Kevin Krolicki; editing by Leslie Gevirtz)
http://uk.reuters.com/article/motoringAutoNews/idUKN1733369920090417
* Offer to convert all $48 bln of debt into equity-sources
* Treasury could convert its own loans to GM stock-sources (Adds equity-based plan details, background from comments by GM CEO)
By Soyoung Kim and Emily Chasan
DETROIT/NEW YORK, April 17 (Reuters) - The Obama administration has directed General Motors Corp (GM.N) to prepare a new debt restructuring plan that would convert all of the $48 billion the automaker owes bondholders and its major union into equity, people briefed on the plan said on Friday.
The U.S. Treasury, which has provided $13.4 billion in emergency funding to keep GM operating since the start of the year, has indicated that it could also convert those taxpayer-backed loans into GM stock, the sources told Reuters.
GM plans to make the new proposals to bondholders and the United Auto Workers union within the next two weeks, the sources said.
The sources asked not to be identified because of the confidential nature of the talks between the automaker and President Barak Obama's autos task force, which is charged with retooling the U.S. auto industry.
GM representatives could not be immediately reached for comment. The Treasury Department had no immediate comment.
The proposals emerged after two weeks of intense talks between the autos task force, headed by former investment banker Steve Rattner, and GM executives in Detroit.
The proposed payout to GM's major union and its bondholders in stock alone would represent much deeper concessions for both groups than the terms they had been offered under the GM bailout loans approved by the Bush administration.
"The task force was clear this was the best way for GM to achieve success going forward," said one of the sources.
Under the terms of its former restructuring plan, GM had aimed to cut its roughly $28 billion of bond debt by two-thirds and convert half of the remaining $20 billion it owes to its retiree health care fund in equity, rather than cash.
But the autos task force rejected that plan, saying GM needed to cut more debt from its balance sheet in order to be a profitable company.
GM Chief Executive Fritz Henderson, who assumed the top job in late March when the Obama administration ousted his predecessor, Rick Wagoner, told reporters on Friday that GM management had spent the past two weeks working with U.S. officials on a revised business plan.
That plan, which will include more job cuts and plant closures, will be shared with bondholders and the union as talks on the planned debt restructuring intensify in coming weeks, he said.
It was still feasible for GM to avoid bankruptcy, but Henderson said the automaker was also working on detailed plans for a filing if it is forced to restructure under court protection. (Reporting by Soyoung Kim and Emily Chasan; writing by Kevin Krolicki; editing by Leslie Gevirtz)
http://uk.reuters.com/article/motoringAutoNews/idUKN1733369920090417