GM: Stage set for largest ever US industrial bankruptcy
27 May 2009, 0343 hrs IST, AGENCIES
DETROIT/NEW YORK: General Motors Corp has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the
GM largest-ever US industrial bankruptcy within days.
The event marks a critical disappointment for GM, the largest US automaker and once considered the bellwether of US manufacturing.
"I would say this is a sound rejection of an unsuitable offer," said Pete Hastings, a credit analyst at Morgan Keegan who has followed GM. "I have been saying for some time that this thing was dead on arrival and we were just waiting for the doctor to pronounce it dead. Now that's happened."
The largest U.S. automaker had so far failed to gain anywhere near the 90 percent of bondholder support desired to stave off bankruptcy, two sources familiar with the discussions told Reuters on Tuesday. Bondholders have until midnight to make their final decision on the tender.
As of midday Tuesday, the source said the company had only a "low-single-digit" percentage interest from bondholders.
But bondholders have balked at proposals that they forgive debt in exchange for a 10 percent stake in a restructured company.
27 May 2009, 0343 hrs IST, AGENCIES
DETROIT/NEW YORK: General Motors Corp has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the
GM largest-ever US industrial bankruptcy within days.
The event marks a critical disappointment for GM, the largest US automaker and once considered the bellwether of US manufacturing.
"I would say this is a sound rejection of an unsuitable offer," said Pete Hastings, a credit analyst at Morgan Keegan who has followed GM. "I have been saying for some time that this thing was dead on arrival and we were just waiting for the doctor to pronounce it dead. Now that's happened."
The largest U.S. automaker had so far failed to gain anywhere near the 90 percent of bondholder support desired to stave off bankruptcy, two sources familiar with the discussions told Reuters on Tuesday. Bondholders have until midnight to make their final decision on the tender.
As of midday Tuesday, the source said the company had only a "low-single-digit" percentage interest from bondholders.
But bondholders have balked at proposals that they forgive debt in exchange for a 10 percent stake in a restructured company.
