General Motors’ bondholders’ advisors announced that they submitted a framework plan that would provide the best chance at an out-of-court restructuring for GM. The plan was submitted to the auto task force several weeks ago.
Advisors to the bondholders said the framework plan meets two objectives: being consistent with the government’s restructuring requirements and “securing a high level of acceptance among a diverse group of GM bondholders- from mutual funds to pension funds to retail bondholders.”
Securing a high level of acceptance is necessary because under the bailout, GM must reduce the money it owes its bondholders by about two-thirds. GM currently owes its bondholders approximately $27 billion. Bondholders have claimed those terms to be unfair given the payout terms being offered to UAW factory workers and the remaining debt at GM.
In the advisors’ statement, no specific information about their plan is given. They do say their plan “is one of several options on the table that seek to achieve a successful out-of-court restructuring.” No plan has been concluded to secure a debt-to-equity exchange as is required before the March 31st deadline for the auto task force. The statement does say the bondholders want GM to survive and they are eager to continue discussion with both GM and the auto task force.
Source: Automotive News