Word: gm
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...industry is not terribly different. If the Treasury controls GM (GM), first it will have to decide how much control it wants to exercise and to what extent it wants to influence company policy. Beyond that, if the company does well, the yield from the government's investment may be locked up, unless it can find another car company, almost certainly foreign, to take its stake. That brings the conversation around to whether the Congress is anxious for GM to be controlled by VW or Toyota (TM). (See pictures of Detroit's decline...
...odds of a GM deal with bondholders may be more bleak. As part of its offer to bondholders, presented Monday, GM is offering to exchange 225 common shares for each $1,000 of principal amount of bonds. The offer covers $27.5 billion of bonds, and based on the recent price of GM stock would result in bondholders receiving less than 40% of a bond's original face value. GM's chief executive Fritz Henderson described the terms of the offer as "stern." For the swap to take place 90% of the bondholders must accept the offer. If that percentage...
...nearly parallel track, GM announced on Monday that it was taking important new steps to reduce costs as it also struggles to avoid bankruptcy and meet a June 1 deadline from the government for restructuring its operations. In its Monday announcement, GM said that by 2010 it intends to close 13 car plants, eliminate 21,000 jobs, reduce its dealer network by 42%, and eliminate the Pontiac brand. It also announced that it has reached an agreement with the U.S. Treasury to convert 50% of the outstanding government loans to the company - or about $5 billon - into GM stock...
...remaining party to any GM or Chrysler accord that averts bankruptcy will be the bondholders, who must agree on a reduction in the amounts owed. At Chrysler, bondholders made concessions on Friday, reducing Chrysler's $6.9 billion of outstanding debt for the second time. The bondholders had earlier agreed to accept $4.5 billion; on Friday they reduced the amount further, to $3.75 billion. A final deal with creditors much be reached by May 1. Among Chrysler's biggest bondholders are JP Morgan Chase, Citigroup, Goldman Sachs and Morgan Stanley. Even if Chrysler reaches a deal with its major creditors...
Surgical bankruptcy n.-- A term adopted by lawmakers and execs to give the impression that a GM bankruptcy could be quick and painless...