GM offering unions 10b $ in preffered stock.. WHO IS BUYING THIS SHIT??? LOL!! It dilutes the common by at least 3x from a glance!
And 10 billion dollars more in cash!! AND 9% interest!! Equity has officialy entered the guillotine block
I agree that this is not good for GM common stock. I was able to sell some April $3 calls at some nice prices this morning.
http://www.cnbc.com/id/29915225/site/14081545?__source=yahoo|headline|quote|text|&par=yahoo GM Makes Offers to Union, Bondholders CNBC has learned the details of the revised terms being offered to the GM debt holders and the UAW. The negotiations remain fluid and details could be change as offers and counter offers are made. To the Union: GM owes the unions $20 billion for their retiree healthcare benefits. (This is called VEBAâ General Motors Headquarters AP General Motors Headquarters voluntary employee benefits association.) GM is offering them $10 billion in cash, amortized over 20 years, and $10 billion preferred stock with a 9% coupon. To the Bondholders: GM [GM Loading... () ] owes the bondholders approximately $28 billion dollars and has offered them two choices. Choice 1: 8 cents in cash, 16 cents in new unsecured debt, and 90% of the equity in GM. Choice 2: Still unclear, but it is believed to include 90% of equity in the new company. Agreements with the union and bondholders are key to GM's effort to turn itself around with a new capital structure. Last weekend G M bondholders sent a letter to Treasury Secretary Timothy Geithner and the leaders of the auto task force Sunday expressing frustration that they have received no response from either GM or the auto task force regarding their suggestions for a near $28 billion debt exchange. Michelle Caruso-Cabrera General Assignment Reporter As part of the US government's recent bridge loan to GM, the company is required to reduce its debt from $27.5 billion to $9 billion. The company wants debt holders to hand in their bonds and accept stock of far lesser value. Advisors to some of the bondholders call the current offer unfair because it requires them to take a much larger financial hit than many of the other constituencies in the restructuring including the unions and suppliers. The union is being asked to accept 50 cents worth of stock for every dollar owed to them by the company for their healthcare benefits, while bondholders are only getting 30 cents under the current plan. * See Full Text of the Bondholders' Letter Bondholders argued if the suppliers, dealers and unions don't sacrifice even more, the company will not survive and the stock they are given will become worthless. In the letter, the advisors argued that many retail investors will be hurt by the terms of the deal on the table. "GM bondholders are not a collection of 'Wall Street banks.' Many of these bonds are owned by average citizens, who purchased them to support their own retirement and college expenses and other critical needs," the letter says. "Most of these bonds were issued when GM was an investment grade rated company as a safe way for individuals and conservative institutions to invest for the future." Some $5 billion of GM bonds were offered in increments as low as $25, suggesting they were bought by individuals. In addition, GM's bonds are held by many pension funds and mutual funds. Calpers, Franklin Resources, and PIMCO are some of the biggest holders.
Anyone here buying the exchange traded bonds GRM, BGM, XGM? If the gov't bails out the bondholders it's easy money $$$$, yes?
US autos task force rejects GM, Chrysler plans WASHINGTON, March 29 (Reuters) - The Obama administration autos task force on Monday rejected the turnaround plans of General Motors Corp (GM.N) and Chrysler LLC and warned both could be put through bankruptcy to slash debts. The announcement by the White House autos panel headed by former investment banker Steve Rattner marked a stunning reversal for management at both automakers and for GM investors and creditors who had bet on a softer line. "We have unfortunately concluded that neither plan submitted by either company represents viability and therefore does not warrant the substantial additional investments that they requested," said a senior administration official, who asked not to be named. Instead of granting GM's request for up to $30 billion in loans, the administration only pledged to fund GM's operations for the next 60 days while the top U.S. automaker develops an even more sweeping restructuring plan under new leadership.
http://www.reuters.com/article/marketsNews/idESN3026528120090330?rpc=44&sp=true FACTBOX-Key details from US autos task force findings DETROIT, March 30 (Reuters) - The U.S. task force overseeing the restructuring of the auto industry on Monday said the plans submitted by General Motors Corp (GM.N) and Chrysler failed to show how they could be viable. GM will receive 60 days of additional working capital to resolve the situation and Chrysler, about 80 percent controlled by private equity firm Cerberus Capital Management [CBS.UL], will have 30 days to complete an alliance with Fiat SpA (FIA.MI). The task force said an expedited bankruptcy process to help GM and Chrysler eliminate unsustainable debt loads may be the best path if out-of-court restructurings with creditors cannot be negotiated. The government also said it would launch a plan to guarantee the warrantee coverage of consumers who purchase new GM and Chrysler vehicles during the next phase of their restructuring. For more stories click [ID:nN29520526] Key findings by the autos task force follow: GENERAL MOTORS The conclusion: GM's plan would not provide viability over the long term even if the economy improved. The task force said GM could be made viable with more restructuring and said it would give the automaker 60 days of working capital to develop a more aggressive restructuring plan and "credible strategy" to complete it. Leadership changes: GM Chief Executive Rick Wagoner will step aside. Kent Kresa will serve as interim chairman and current President and Chief Operating Officer Fritz Henderson, as CEO. GM also will aim to replace a majority of its board in coming months. The plan will include "an increased effort by the U.S. Treasury and outside advisers to assist with the company's restructuring effort," according to the task force. More cuts required: GM must substantially reduce its debt and existing liabilities and will require substantially greater balance sheet concessions than for its existing loans. The automaker must reach full competitiveness with the U.S. operations of foreign automakers rapidly and make a more aggressive restructuring of manufacturing, headcount, brand, nameplate and retail sales networks.