GM bondholders seeking majority stake in return for forgiving debt

GM’s debt holders will offer a counter proposal to the struggling automaker’s debt restructuring plan today to the Obama auto task force at 1 pm.

According to CNNMoney, the Ad Hoc Committee, which represents about 20 percent of GM’s bondholders, will propose that GM should offer new stock giving the bondholders a whopping 58 percent stake in the company, the union 41 percent and current shareholders less than 1 percent.┬áThe shares would be in return of a $27 billion GM debt owed to bondholders.

Under the bondholders’ plan, the U.S. Treasury Department will not receive any stake in General Motors.

On Monday, GM launched exchange offers for the $27 billion debt offering “225 shares of GM common stock for each 1,000 U.S. dollar equivalent of principal amount (or accreted value as of the settlement date, if applicable) of outstanding notes”

When asked to comment of the bondholders’ offer, GM issued a short statement saying it plans on proceeding with its own plan.

– By: Kap Shah

Source: CNNMoney