Courage: GM Bondholders Stand Up To Rotten Deal

God Bless them and considering Obama's use of vile rhetoric against the Chrysler bondholders and the allegations of threats against , them it shows some real courage. It appears the GM bankruptcy is becoming more real by the day.

Detroit--- General Motors, the struggling automaker, inched closer to a bankruptcy filing on Friday when the company’s largest bondholders reiterated they would reject an offer to convert their debt into G.M. stock.The decision by the bondholders threatens to derail G.M.’s efforts to eliminate $27 billion in debt before a June 1 deadline set by the Obama administration.

G.M. has offered its bondholders 225 shares for each $1,000 worth of debt, which over all would give them a 10 percent stake in the company.

The company has said it needs 90 percent approval from its bondholders by next Tuesday if it is to avoid bankruptcy.

But the committee of G.M.’s biggest bondholders, which represent 20 percent of the overall debt, said there was no support for the current offer.

“It’s been a universal ‘no’ from the get-go,” a spokesman for the committee, Nevin Reilly, said. “Bondholders are being seen as speculative bad guys, but bondholders are investors, many of whom put their retirement money into G.M.”

Other, smaller investors have also protested the offer as unfair, increasing the likelihood that G.M. will fall well short of the 90 percent threshold.

Apparently giving the UAW 39% of the company and the government 50% is considered unfair.The goal of the taxpayers is profit, why should they go along with a deal designed to create a government run industry whose primary job is provide Democrat backed groups with Taxpayer dollars in exchange for votes and donations.
Update, what the Bondholders want and a breakdown of the deal:

As DealBook colleague Bill Vlasic reported earlier this week, the U.A.W.’s deal with G.M. allows the company to finance half of its future retiree health car costs — which this person estimated at $17 billion to $18 billion — with company stock. That means that while the figure isn’t 39 percent, it’s likely to be a fairly significant sum. (In a similar deal with Chrysler, the U.A.W. received a 55 percent equity stake in the carmaker to finance that company’s retiree health care obligations.)

The actual amount that the U.A.W. will receive couldn’t be learned Friday afternoon. It won’t be disclosed publicly until the union canvasses 61,000 members in the United States for a vote on the deal, something likely to take place either Tuesday or Wednesday morning, this person said.

According to the terms of G.M.’s reorganization plan, the Treasury Department will get about 50 percent of the restructured company, and existing shareholders get what amounts to a tip with 1 percent.

That leaves the question of who gets the extra equity. One possibility is that the remainder will go to other G.M. creditors, as a repayment of their claims.

Even if the U.A.W. doesn’t quite get a 39 percent equity stake, that’s not likely to appease the bondholders. A committee representing 20 percent of these investors made a counter-proposal last month, pushing for a 58 percent stake in a reorganized G.M.

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