GM Bondholders reject stock swap

Debt Exchange Falls Short; G.M. Moves to Sell Units

Excerpt:

Bondholders at General Motors on Wednesday rejected an offer to exchange $27 billion in debt for a small amount of stock, as G.M. prepared for a bankruptcy filing that could come as soon as this weekend.

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In a statement about the bondholders, G.M. did not give vote totals for the tender offer, which began on April 27 and expired at 12:01 a.m. Wednesday. G.M. had required 90 percent of bondholders to agree to exchange their debt, said said Wednesday morningthat the notes tendered were “substantially less than the amount required.”

Without approval, G.M. had said it would seek bankruptcy protection. But it made no announcement of its plans. The company said it had withdrawn its offer, and that its board would meet to decide further steps.

Comment: Some have the view that it is only the well-to-do impacted by this. My dear 89 year old Mother has either $ 4000 or $ 6000 in GM bonds. Her broker advised her several years ago to buy these because of the interest rate. The recent GM offer was to exchange bonds for stock at a stock price of $ 4 something per share. Well the stock is trading (right now) at $1.31. We obviously advised her against it. A stock swap would have been a 70% loss.