GM bondholders reject offer, bankruptcy preparations are now on

As reported earlier this morning, GM’s showdown with the bondholders is its biggest obstacle to restructure and avoid a bankruptcy filing by its June 1 government imposed deadline. The automaker won a 86 percent approval from the CAW for a new cost-cutting deal and the same is expected from the UAW later this week.

According to a report by Reuters, GM has failed to convince enough bondholders to accept a debt-for-equity swap, and is now planning to file for Chapter 11 by the end of the week.

According to two sources familiar with the matter, GM failed to gain the near 90 percent of bondholder support that it needs to fight of bankruptcy. Insiders say that GM had only “low-single-digit” interest from bondholders.

Nonetheless, bondholders have until midnight to change their mind. GM is hoping to reduce its $27 billion debt in exchange for a 10 percent stake in the restructured company.

– By: Omar Rana

Source: Reuters