RKMBs Forums .::Important::. Politics and Current Events Democrat Leaders Want Automaker Bailout

The revised offer to the holders of $27 billion in unsecured GM bonds amounted to a take-it-or-leave-it ultimatum: Go along with what the government auto task force's proposal or be left holding the assets a new GM doesn't want — ones with presumably little value at all.

In addition to the 10 percent of the stock in a newly formed GM that was originally rejected by bondholders, the new offer would give them warrants to acquire an additional 15 percent stake at a deep discount. That would come only if they agree to support selling the company's assets to a new company under bankruptcy court protection.

The Securities and Exchange Commission filing said that if enough bondholders don't agree to support the sale by 5 p.m. Saturday, the amount of stock and warrants they get would be substantially reduced or eliminated. The filing didn't specify how much support is needed.

The government had demanded that 90 percent of GM's bondholders agree to a previous debt-for-equity swap that failed. The Obama administration official said the government would not require a specific percentage of bondholders to approve the new proposal but would make a judgment call based on the level of support.

About 15 percent of bondholders had agreed to the previous proposal, the official said. Combined with the approval of a bondholders committee and other large debtholders that collectively hold about 20 percent of GM's unsecured debt, the government now expects at least 35 percent support, the official said.

The committee said it would go along with the new deal, but it was still unfair.

"While the committee continues to remain troubled by preferential treatment that the UAW VEBA is receiving compared to the bondholder class — rejecting this offer in the expectation that the bondholders will do better in a litigated outcome was a risk the committee is unwilling to take," the committee said in a statement.

A coalition of retail bondholders, meanwhile, continued to oppose the offer. The group said the new offer remained unfair to retirees who depend on GM bonds for income and was overly favorable to the UAW.

"From the beginning there's been a lack of transparency in this entire restructuring process," said Jim Martin, president of the retiree group 60 Plus Association, in a statement. "No one seems to have the best interests of small bondholders at heart."

United Auto Workers President Ron Gettelfinger, in a telephone interview with The Associated Press Thursday, said he didn't want to get into a debate with bondholders while the union is pushing for ratification of concessions to GM.

"An objective person that stood back and looked at all the sacrifices that have been made by active workers and retirees would see that we have made tremendous sacrifice," he said. The union's role, he said, was to get the best deal it could for active members and retirees.

Under the proposal, GM would enter bankruptcy protection and its good assets would be separated from bad ones.

The U.S. Treasury, which already has lent GM $19.4 billion, would get 72.5 percent of the new company's shares and provide $30 billion in additional financing needed to keep the new GM operating while its reorganization plan is reviewed by a bankruptcy court judge and the old GM is liquidated. The Canadian government was expected to provide an additional $9 billion, the Obama administration official said.

A United Auto Workers' retiree health care trust fund will get 17.5 percent and the old GM, effectively owned by the unsecured bondholders, would get a 10 percent stake.