What do GM bondholders get (Detroit Free Press, Bloomberg)

Bondholders of old GM to get shares in new GM shortly

BY CHRISSIE THOMPSON

DETROIT FREE PRESS BUSINESS WRITER

Apr 6, 2011|

General Motors' pre-bankruptcy
bondholders, who have waited more than
four months to share in the automaker's
return to the stock market, will receive
shares in the new GM on or around April
21, according to a bank representing
them.

After GM exited Chapter 11 in July 2009 as
a new company, its cast-off assets
remained in bankruptcy, waiting to be sold.
Bankruptcy Court Judge Robert Gerber
signed a plan last week that Motors
Liquidation -- the name for the unwanted
assets -- will use to liquidate this year.

As part of that plan, bondholders in the old
company will trade their bonds for stock in
the new company and warrants to buy
more shares. That stock and warrants
should arrive in bondholders' brokerage
accounts "on or about April 21," according
to a statement on the Web site of
Wilmington Trust, a bank representing
bondholders.

The bonds will be put in a pool with about
$36.4-billion worth of unsecured claims,
CRT Capital analyst Kirk Ludtke said in a
research note last week. About 10% of
GM's 1.5 billion common shares -- which
closed at $32.87 Tuesday afternoon -- will
be issued to bondholders proportionately
to the value of their bonds.

Those investors will also receive warrants
to buy another 15% of GM's stock by either
2016 or 2019. Bondholders will purchase
that extra stock by paying either $10 or
$18.33 per share.

The initial payment of stock and warrants
will be about 70% of what each bondholder
will eventually receive. The rest will be paid
out as the last claims against old GM are
paid, with most of the remainder to arrive
within three or four months. The rest could
trickle in over a year or longer.

Bondholders with questions may contact
Wilmington Trust at 866-521-0079 or
mlcguctrust@wilmingtontrust.com.

Contact Chrissie Thompson: 313-222-
8784 or cthompson@freepress.com

--------------------------------------------------

Old GM Bondholders Getting Shares in New GM May Depress Price
April 07, 2011, 12:04 AM EDT
By David Welch

April 7 (Bloomberg) -- Investors holding bonds in the old General Motors Corp. will receive stock and warrants for shares in the new General Motors Co. on April 21, an action that analysts said may depress the stock price.

Old GM, now known as Motors Liquidation Co., will give bondholders 150 million shares in GM and warrants to buy 272.8 million more shares. A trust holding the shares will distribute them directly to bondholders’ brokerage accounts on or after April 21, according to a memo distributed Wilmington Trust Inc., a money-management firm hired by the creditors’ committee.

Some of the bondholders are retail investors who may sell the shares and briefly sink GM’s stock price, said David Whiston, an analyst with Chicago-based Morningstar Inc. Investors have probably priced in the dilution, so it won’t change GM’s long-term value, he said. He has not changed his $48 a share valuation based on the release of shares to bondholders.

“I would think that there will be more selling than holding,” Whiston said. “Any sell-off in GM is a buying opportunity. Long term, I think the company is positioned very well.”

Bondholders were promised stock and warrants in the new GM to make up for some of their loss during the predecessor company’s government-backed bankruptcy. The warrants given to bondholders for new GM stock are already in the money, according to a report by Kirk Ludtke, senior vice president of CRT Capital Group, a money management firm in Stamford, Connecticut.

Warrant Release

When U.S. Bankruptcy Court releases the warrants and stock through a trust, bondholders will collectively get 136.4 million warrants for one share each at $10 a share and an equal amount at $18.33 a share, said Wilmington Trust, which is based in Wilmington, Delaware.

Owners of old GM bonds must notify Wilmington Trust by April 15 to get stock and warrants on April 21. If they notify Wilmington later, the bondholders will get their shares and warrants at a later date.

Currently, Motors Liquidation has about $30 billion in claims allowed by bankruptcy court, of which about $29 billion are from the bondholders, said a person familiar with the matter.

There may be as much as $8.8 billion in additional claims that could be allowed by the court, Ludtke said in the report.

If the approved unsecured claims exceed $35 billion, GM would have to issue up to 30 million shares, Jim Cain, a company spokesman, said in an interview. GM doesn’t expect claims to reach that amount, the company said in a regulatory filing.

The bonds issued by General Motors Corp. should recover about 30 cents on the dollar when the shares are distributed later this month, Ludtke said in a telephone interview. He expects GM’s share price to rise to $40, which implies a recovery rate of about 40 cents on the dollar, Ludtke said.

GM shares were unchanged at $32.87 yesterday in New York Stock Exchange Composite trading, down from a high of $38.98 on Jan. 7. The shares were priced at $33 for the initial public offering in November.

--Editors: Jamie Butters, Kevin Orland.

To contact the reporter on this story: David Welch in Southfield, Michigan, at dwelch12@bloomberg.net.

To contact the editor responsible for this story: Kevin Orland at korland@bloomberg.net.

What the GM bondholders get from the IPO (Detroit Free Press)

Posted: Nov. 15, 2010
In GM IPO, stakeholders could walk away with billions as stock hits the market this week

Some will see billions as stock is released to public this week
By CHRISSIE THOMPSON
FREE PRESS BUSINESS WRITER

This week, General Motors' stakeholders will see some cash. Finally.
If all goes as planned, GM will price its initial public stock offering on Wednesday, and the stock will hit the market on Thursday morning with new owners.

As trading begins, owners such as the U.S. Treasury will walk away with billions of dollars in exchange for releasing their GM stock to the public.

But that doesn't include GM bondholders -- many of whom are Detroiters who supported the home team years ago through their investment portfolio.

During GM's bankruptcy last year, the bondholders were given a 10% stake in the new GM. But they won't actually receive the shares until the liquidation of the cast-off portion of the old GM that is still in bankruptcy. That's expected to take three to six months, according to an insider from a firm that's a major bondholder.

Until then, GM's bonds will continue to trade. And starting this week, so will the stock -- with everyday Joes like Kris Trexler eager to get a piece from the stock's first public owners.

Trexler, a Los Angeles film and video editor, said he cried when he turned in the EV1 electric car that GM canceled a decade ago. He's now one of the consumer advisers testing a Chevrolet Volt for three months -- and he already has a Volt on order for when the test ends.

"After driving this car ... I can't think of any reason I wouldn't buy some stock," Trexler said. "This company is back, and they've proved it to me."

Old GM bonds guarantee shares of new GM stock

"I've been holding them for years. What's another couple of months?"

That's the strategy Northville's Frank Drew says he's using for his General Motors bonds. The bonds, with a face value of about $150,000, are now trading at about a third of their original value. But once the part of the old GM still in bankruptcy is liquidated, Drew will get GM stock. His bonds will be put in a pool with about $37 billion worth of bonds and other unsecured claims, and 10% of GM's 1.5billion common shares will be issued to bondholders proportionately to the value of their bonds.That stock will be Drew's to do with as he wishes -- just as it will be for the buyers of GM's stock when it hits the market Thursday, 16 months after the company exited Chapter 11 bankruptcy.

GM is planning to sell up to 419.75 million common shares and 69 million Series B preferred shares to hedge funds, money managers and long-term investment firms. Those firms will then trade the stock on the New York and Toronto stock exchanges.

The automaker set a target range for the common shares at $26 to $29 each, but GM is expected to raise that range early this week by no more than a few dollars, according to two sources familiar with the situation. As executives finish their road show presentations to investors in North America and Europe, they're gauging the interest of the all-important long-term investment firms. GM needs those firms to hold stock for months, or even years, to keep it stable.

By all accounts, demand for GM stock is strong, likely enough for every possible share to sell. And the recent market improvements only help. The Dow Jones Industrial Average has gained about 500 points in the last month, and more than 1,000 in the last two months, closing Friday at 11,283.

Probable buyers include GM's Chinese automaker partner SAIC and investment funds from the Middle East.

That could create controversy for the IPO's largest seller, the U.S. Treasury, which is planning to use the sale to lower its stake in GM from 60.8% to slightly more than 40%. The treasury has said that some foreign investors would be allowed, but consumer advocate and former presidential candidate Ralph Nader cosigned a letter last week to President Barack Obama, urging him to suspend the IPO, partially because of the need to keep investment in the U.S.

Nader was also concerned that the government plans to sell part of its stake at a loss. The government needs to average $43.67 per share to break even on its $50-billion investment in GM, above the likely range. The treasury is hoping GM's stock will grow in value over the coming months and years so it can make more money when it sells the rest of its shares.

An increase in stock price is likely, said a person from a firm that owns a large number of GM bonds. The firm expects GM's stock to quickly reach the mid-$30 range the bond trading currently implies. And by 2013 or 2014, the person said, the firm expects the stock to hit $60 to $70 each, as long as GM fulfills executives' predictions that the company will make $11 billion to $13 billion annually before interest and taxes in an average sales climate.

GM bondholders will also receive warrants to buy more stock by either 2016 or 2019. Bondholders will be able to receive that extra stock by paying either $10 or $18.33 per share, which will count as revenue for GM. The warrants will take bondholders' total share in GM to 23.85%.Contact Chrissie Thompson: 313-222-8784 or cthompson@freepress.com

When is the GM IPO? After the Election (WSJ)

Official White House Briefing: "Fact Sheet on Obama Administration Restructuring of General Motors"

Treasury Provides Further Guidance on GM IPO

AUTOS SEPTEMBER 21, 2010

China's SAIC Expresses Interest in Buying GM Stake


By SHARON TERLEP
DETROIT—Interest by China's biggest auto maker in possibly buying a stake in General Motors Co. this fall raises the dicey issue for the U.S. government over foreign investment in the Detroit company.

SAIC Motor Corp., which has built cars with GM in China since the 1990s, hasn't decided whether to participate in GM's initial public offering but has expressed an interest in doing so, people familiar with the matter said.

GM declined to comment about SAIC. The Chinese auto maker said only that it is closely watching the GM offering. SAIC's interest was first reported by Reuters news service.

The issue of foreign investors buying GM shares in the company's IPO is a thorny one for the U.S. government, which is eager to unload its 61% stake in the auto maker.

The Treasury is likely to seek out large institutional investors to buy blocks of GM stock at a set price. Such "cornerstone" investors typically commit to holding their stock as a show of confidence, which can help draw other investors. In exchange, cornerstone investors sometimes get a favorable deal on the shares. Several U.S. investors have expressed an interest in buying a stake in GM, including potential cornerstone investors, according to a person familiar with the situation.

The larger the group of cornerstone investors, the easier it would be for the Treasury to sell a big chunk of its GM stake in the IPO. GM and the banks underwriting the deal are pushing for the biggest possible investor pool to increase the size of the offering. The IPO will likely involve shares held by the Treasury, a union-managed retiree trust fund and Canadian governments.

But the Treasury also is worried about the political reaction if non-U.S. investors, such as sovereign-wealth funds or a Chinese company, are allowed to acquire a significant stake in GM after U.S. taxpayers spent $50 billion to assist the company through bankruptcy reorganization.

"Critics will publicly blast the Obama administration for using taxpayer money to fund foreign ownership in an American icon," said Morningstar automotive equities analyst David Whiston. Yet restricting foreigners from buying stock in the IPO would be impractical since the shares would be available on the public market, he said.

Indeed, the Treasury, in an effort to maximize the share price and establish a solid shareholder base, said last week that all investors will have access to GM shares. The statement also said, however, that no single investor or group of investors would receive "a disproportionate share or unusual treatment."

GM plans to begin pitching the IPO to investors immediately after the Nov. 2 midterm elections, which could keep the IPO separate from campaign politics. The goal is to conduct the offering before the end of the month. GM Chief Executive Dan Akerson said last week that it will likely take years for the U.S. government to unload its entire stake.

Mr. Akerson, who took over as CEO Sept. 1, has been more pragmatic about the IPO than was his predecessor Edward E. Whitacre Jr., who pushed the Treasury to unload as many shares as possible as quickly as possible. In contrast, Mr. Akerson last week acknowledged the importance of Treasury getting the best possible share price, even if means the government continues to hold some shares for some time.

China's auto market, the world's biggest, is a key source of strength for GM.

The auto maker's sales in China rose 19% in August from a year earlier while the U.S. and European markets struggled. The auto maker's partnership with SAIC has been central to GM's success in China and is expected to continue to play a major role.

Such joint ventures also are an important platform to reaching other fast-growing, emerging markets. GM and SAIC are teaming to expand in India, for example.

Write to Sharon Terlep at sharon.terlep@wsj.com

The GM IPO (Businessweek, Reuters, Barrons)

Barron's Cover | SATURDAY, AUGUST 21, 2010
Who's Driving?
By ANDREW BARY

Speculation on the new GM: IPO Price, What old GM Bondholders Might Get

"....The way for investors to play the new General Motors is through the debt of the old GM. Valuing that $27 billion (face amount) of debt isn't simple because the bonds are entitled to 50 million GM shares and two issues of warrants to buy more. The warrants, each involving 45.5 million shares, have strike prices of $30 and $55 and aren't easy to value. And there's an additional wrinkle: Bondholders aren't the only creditors entitled to the stock and warrants. There may be at least $37 billion of total claims allowed by the bankruptcy court, GM said in its IPO prospectus. This means that the stock and warrants will be apportioned to a larger group of creditors than just bondholders...."



GM plans to file for IPO during week of August 16: sources
Fri, Jul 23 2010
By Clare Baldwin and Soyoung Kim

NEW YORK/DETROIT (Reuters) - General Motors Co plans to file its registration for an initial public offering during the week of August 16, just after the expected date for its second quarter results, according to two people with direct knowledge of the preparations.

A GM filing with the U.S. Securities and Exchange Commission would be the first step toward an IPO to reduce the U.S. government's ownership in the automaker after a $50 billion bailout in 2009.
By filing with the SEC in August, GM is aiming to complete its IPO before the November U.S. elections, according to the sources, who asked not to be named because the closed-door preparations remain confidential.

GM also remains in talks with Bank of America Corp , JPMorgan Chase & Co , and Wells Fargo & Co for dealer and consumer financing for more credit-worthy borrowers, one of the sources said.

One concern for potential investors has been whether GM dealers and potential car buyers have the same kind of access to financing as competitors with in-house financing operations like Ford Motor Co .

General Motors on Thursday said it would buy auto finance company AmeriCredit Corp for $3.5 billion in cash to form what it called the "core" of a captive finance operation. The move marks a reversal of the position GM took when it sold control of its former in-house financing arm GMAC in 2006.

Any additional financing partnership agreement GM reaches would be complementary to the AmeriCredit transaction, one of the sources said. Many GM dealers have complained that lack of consumer financing has cost them sales.

An IPO for the U.S. automaker, which was restructured in bankruptcy last year, would be the biggest U.S. stock offering since Visa Inc's $19.7 billion March 2008 IPO and one of the biggest IPOs of all time.

GM's second-quarter earnings report is expected to show the automaker generated cash for a second consecutive earnings period, according to one of the sources.

GM Chief Financial Officer Chris Liddell told CNBC on Thursday that the automaker would report results in about three weeks.

GM spokeswoman Renee Rashid-Merem told Reuters on Thursday the automaker would report second quarter results in mid-August.

"Beyond that, we aren't commenting on matters relating to an IPO. We will launch an IPO when the conditions are right and the company is ready," she said.

U.S. officials have said repeatedly that GM's board of directors have a free hand to run the company to try to improve the return for taxpayers.

The automaker posted its first quarterly profit since 2007 in the first quarter. In the June-ended quarter, industry-wide U.S. auto sales were above 11 million vehicles on an annualized and adjusted basis.

But GM's lower cost structure coming out of bankruptcy has allowed the automaker to break even with industry-wide U.S. sales as low as about 10.5 million vehicles, the sources said.

UAW, CANADA SALES PROPORTIONAL

GM's biggest shareholder is the U.S. Treasury, which owns nearly 61 percent of the automaker. The Treasury is expected to sell between 20 and 24 percent of its stake, sources said earlier this month.

The United Auto Workers healthcare trust, which owns 17.5 percent of GM, and the governments of Canada and Ontario, which own 11.7 percent, are expected to sell the same share of their holdings as the U.S. government, one of the sources said on Thursday.

GM, which is not expected to pay dividends on its newly-issued common stock, also plans to sell $3 billion worth of mandatory convertible securities, a source said earlier this month.

The U.S. automaker also is in the process of finalizing a $5 billion revolving credit line, several sources have said.

(Reporting by Clare Baldwin in New York and Soyoung Kim in Detroit, additional reporting by Kevin Krolicki in Detroit; editing by Carol Bishopric





Politics & Policy July 15, 2010, 5:00PM EST
GM's IPO May Require Hefty Incentives
The sales pitch will need hope, contrition, and smooth talking

By Roben Farzad, David Welch and Jeff Green

The initial public offering of recently bankrupt and nationalized General Motors looks to be one of the trickiest deals in memory.

True, the still-enormous carmaker has shed billions in liabilities and legacy costs in its "quick-rinse" 39-day bankruptcy. After a federal rescue, GM is again profitable, and its vehicles are selling briskly in the U.S. and China. Yes, the Treasury Dept., which extended close to $50 billion of aid to the behemoth last year, is a motivated seller, eager to prove the bailout a success in an election year in which many voters say bailouts wasted their money. "The initial public offering will be a significant step in carrying out Treasury's previously announced intention of disposing of TARP investments as soon as practicable," states a Treasury memo on the deal, not yet scheduled but widely expected before the November elections.

The Wall Street underwriters, likely to be Morgan Stanley (MS) and JPMorgan Chase (JPM), are so keen to participate that they are accepting a 75 percent discount on their fees, says one person briefed on the matter. Various estimates peg the flotation, including about 20 percent of the government's 61 percent stake, at $12 billion, which would make it the second-largest in a decade, after Visa's (V) $19.7 billion deal in 2008. And do not underestimate GM Chief Executive Ed Whitacre's resolve. "The new management team desperately wants to feel like a legitimate company again," says Steve Dyer of Craig-Hallum Capital Group, a Minneapolis-based trading and research shop. "That can only happen if they get rid of the perception that they're still reliant on the government."

All great, save for one thing: It's not clear that investors are pining to buy GM 2.0. This could be an IPO unlike any other, and not only because Uncle Sam is hawking the shares. The main selling point will not be a quick return on investment. Instead, it will be that GM's limited record of success—the company just reported its first quarterly profit since 2007—is only the beginning. Throw in contrition and appeals to hope and patriotism, and GM just might have a successful offering.

Job No. 1 is restoring "Government Motors" to a staple investment for institutional shareholders. That means convincing investors it can consistently make a profit in a leaner car-selling market. There's no getting around the reality, though, that GM has a ways to go before it wins over the car-buying public. In an April Consumer Reports study of reliability among 15 automakers, GM scored second to last. GM has shed the Hummer, Pontiac, Saab, and Saturn brands and now consists of Buick, Cadillac, Chevrolet, and GMC.

Then there's the let-bygones-be-bygones part of the IPO sales pitch: GM must persuade investors burned by the government takeover and unconventional bankruptcy to buy its shares again. That might require mediation by the U.N. after a bankruptcy proceeding in which the United Auto Workers union received more of the newly issued stock than some bondholders—a rearranging of the stakeholder pecking order that would not have happened in a traditional court-managed filing. "GM and Treasury will pay a price for that," says Maryann Keller, a veteran auto industry analyst who advises large investors. "Three words," says William Smith of New York-based Smith Asset Management, a former holder of GM's old shares: "Smoke and mirrors." He calls the preference given to the UAW in the bankruptcy "dirty pool," something "unprecedented in a democratic country with bankruptcy rules."
Even after its restructuring, GM has a troubling pension burden. Its retirement plan is underfunded by $26.8 billion. While the company doesn't have to make a payment for three years, at some point more money will have to go into the plan.

There are other questions: The reception for GM's much anticipated all-electric Volt, which the company says it will roll out at the end of next year, is uncertain. So is GM's plan to fix its European operations, which lost $506 million in the first quarter. Another unknown is what kind of auto market GM needs to stay in the black. The sales levels of 16 million to 17 million cars a year that once prevailed? Or the present 11 million?

Keller argues that demand has been reset downward because of lagging personal income, fading consumer confidence, and the end of easy credit. Detroit, she notes, has spent the past four decades extending the typical car loan from two years to five or six, to reduce monthly payments and get more units out the door. Now, she says, "we're really at the limit of what you can do with creative auto financing." GM's lack of a dedicated finance arm could also be a problem. "GM will launch an IPO when the conditions are right and the company is ready," says spokeswoman Nina Price, declining further comment.

Perhaps the strongest case for a resurrected GM stock is that many fund managers will have no choice. What was too big to fail a year ago remains too big to ignore in current investing terms. Ford (F), which is the only other remnant of the Big Three available to investors, is the 53rd-largest component in the Standard & Poor's 500-stock index, according to Bloomberg data. GM, which is now probably worth more than Ford's $40 billion valuation, would almost certainly be restored to the S&P 500, the preferred benchmark for mutual funds. "Most fund managers need and want exposure to the space," says Craig-Hallum's Dyer.

The underwriters have a tricky assignment: Unless the stock market ultimately values the 102-year-old automaker at a truly impressive $80 billion, taxpayers will not break even. With confidence flagging in the overall economic rebound and the auto industry's wobbliness in recent months, "the risk remains high that an IPO in this environment is unlikely to generate the best returns for the taxpayers," writes Bill Visnic, a senior editor at Edmunds' AutoObserver.com. As any good dealer will admit, you need heavy incentives and smooth talking to move a rebuilt car off the lot.

The bottom line: Despite a shaky economy, the White House is eager to refloat General Motors after its government takeover and bankruptcy.

Bloomberg Businessweek Senior Writer Farzad covers Wall Street and international finance. Welch is Bloomberg Businessweek's Detroit bureau chief. Green is a reporter for Bloomberg News .

When is the GM IPO? (Wall St Journal)

The Big Guns Coming Out for GM Deal

By RANDALL SMITH And SHARON TERLEP

Wall Street bankers are salivating over one of their biggest potential paydays since the market meltdown of 2008: the planned initial public offering of General Motors Co.

With a size that may top $10 billion, the GM IPO could generate fees of $275 million or more for the Wall Street underwriters, the most fees from a single stock deal since the $19.7 billion IPO of credit-card giant Visa in March 2008 generated $550 million.

Some Wall Street bankers said they expect the GM initial public offering will be led by just two firms, who would typically command the lion's share of the fees.Above, GM's world headquarters in Detroit.
All of which explains why top officials of several major financial giants personally participated in what is known on Wall Street as a "bake-off," a series of meetings in which the bankers present their best ideas for how to sell the stock.

James Dimon of J.P. Morgan Chase & Co., John Mack of Morgan Stanley and Brian Moynihan of Bank of America Corp. all personally took part in the meetings with officials of both GM and the U.S. Treasury Department, which acquired its current 61% stake in a $50 billion bailout last year.

Vikram Pandit of Citigroup Inc., who was visiting Citi offices in Mexico, took part by phone. Although Lloyd Blankfein of Goldman Sachs Group was in London, Goldman's president, Gary Cohn, attended, along with David Solomon, the firm's co-head of investment banking.

Other firms sent some of their best-known personalities as well. For example, Mr. Dimon attended with James B. Lee, the well-known top deal maker at J.P. Morgan. The Citi delegation also included John Havens, head of Citi's institutional-clients group, and Tyler Dickson, the firm's head of global capital-markets origination. The bake-off meetings were previously reported by Fox Business.

Before the bake-off pitches, the Wall Street firms were sent questionnaires asking how they have supported GM in the past, according to one person told of the meetings.

Some Wall Street bankers said they expect the GM deal will be led by just two firms, who would typically command the lion's share of the fees. Firms with armies of retail brokers such as Morgan Stanley and Bank of America, which has brokers from Merrill Lynch, could have an advantage. Another firm with an edge is J.P. Morgan, which has been the biggest lender to the auto industry over the past decade, one person said.

Although the value of GM's former common stock was vaporized in its visit to bankruptcy court last year, the No. 1 U.S. auto maker by sales has been able to slash its debt from $45.9 billion at the end of 2008 to less than $10 billion currently.

It isn't clear yet to what extent GM's other shareholders will sell stock in the offering. They include a union trust for retired auto workers, which holds 18%, the Canadian government, which owns 12%, and former debt holders who own 10%.Some Wall Street analysts estimate GM's market value could top that of Ford at $41 billion and even exceed $70 billion, the level needed for the U.S. government to break even on its investment. That would top GM's peak market value of $60 billion in 1999, when both the stock market and sales of high-profit sport-utility vehicles were booming. Two months ago, J.P. Morgan Chase debt analyst Eric Selle put GM's stock-market value at $90 billion. By comparison, the market value of Toyota is $116 billion.

The Obama administration has said it is hopeful GM can make an offering by the end of this year and is eager to shed its stake in the company, though the auto maker and the Treasury have stressed that the timing is up to GM.

The company doesn't want to rush the offering and would prefer to address some issues—namely its lack of a company-run finance arm and losses in Europe, the site of clashes with labor and state governments over layoff plans—said people with direct knowledge of the company's strategy.

The IPO pickings have been slim for Wall Street ever since the Visa deal. After peaking at $55.3 billion in 2007, the volume of U.S. IPOs tumbled 70% to $16.7 billion last year, Dealogic said. The biggest U.S. IPO since Visa was just $2.2 billion, Verisk Analytics from last October.

The U.S. Treasury recently chose Lazard Ltd. to advise on the IPO. Among those playing a lead role in the underwriter selection are the Treasury's "car czar," Ron Bloom, himself a Lazard banker in the 1980s, and GM Chief Financial Officer Chris Liddell, an alumnus of software giant Microsoft Corp.

In its most recent financial report, GM showed a profit of $863 million in the first quarter of 2010, compared with a $6 billion loss a year earlier, marking the auto maker's first profitable quarter since 2007. Revenue grew 40% to $31.5 billion, and the company generated $1 billion in cash.

GM has cut its costs in the past few years. Deutsche Bank analyst Rod Lache estimates GM cut fixed costs in North America to $20 billion from $40 billion in 2008. He says the recent results show "these guys are building momentum and they have a lot of positives happening."

Earlier in the decade, the auto maker needed U.S. sales to reach 16 million to 17 million annually to make money. Today, GM says it can be profitable in the U.S. market with 10.5 million sales; analysts expect 11.5 million this year. Because bankruptcy slashed GM's debt, interest costs fell to $337 million in the first quarter, less than one-third the former level. Shifting retiree health costs to a union trust fund and other changes to retirement benefits reduced annual costs by another $3 billion.

Write to Randall Smith at randall.smith@wsj.com and Sharon Terlep at sharon.terlep@wsj.com

Info for GM Bondholders (Wilmington Trust)

Q:What is Wilmington Trust’s role?
A:Wilmington Trust is the successor Indenture Trustee to Citibank NA under two separate Indenture
agreements with General Motors, one dated November 15, 1990 and the second dated December 7, 1995.
Q:What is an Indenture Trustee?
A: An Indenture Trustee is the party under the contract that represents the rights and responsibilities of the
bondholders.
Q:What is a successor?
A: A successor in this situation is Wilmington Trust, who succeeded Citibank NA as the original Indenture
Trustee.
Q:What is an Indenture?
A: An Indenture is a contract underlying the bond issue and is between General Motors and the Indenture
Trustee.
Q:What are the securities, including rate, maturity, and CUSIP numbers, which are affected?
A: See attached listing below. *
Q: As a holder of General Motors debt am I going to get paid?
A: As a bondholder you will be represented by Wilmington Trust Company as Indenture Trustee.
Payments made to bondholders will be determined through the bankruptcy process and communicated
to you by Wilmington Trust as Indenture Trustee.
Q: How much will I be paid?
A: As a bondholder you will be represented by Wilmington Trust Company as Indenture Trustee.
Payments made to bondholders will be determined through the bankruptcy process and amounts paid
to bondholders will be communicated to you by Wilmington Trust as Indenture Trustee.
Q: How am I going to get paid?
A:When distributions are available Wilmington Trust as Indenture Trustee and its agents will pay the
holders of record for the securities directly via wire transfer or other method of distribution.
Q: Do I need to file a proof of claim?
A: As a bondholder you will be represented by Wilmington Trust Company as Indenture Trustee. This will
include the filing of necessary documents in the courts, including proofs of claim.
Q: As a bondholder, what do I need to do now?
A: At this time there is no action required on the bondholder’s part. Lines of communication remain open
between the bondholders and the Indenture Trustee and the Indenture Trustee will communicate on a consistent
and equal basis with all bondholders.
General Motors Bondholders
Frequently Asked Questions
Q:What are the next steps?
A:Wilmington Trust Company as Indenture Trustee will work closely with the bankruptcy court, the committees
that are formed, and the company, communicating with the bondholders as necessary and appropriate.
Q: How do I stay in touch with you?
A:Wilmington Trust as Indenture Trustee is creating a distribution list and will provide communications as
appropriate.
Q: Does Wilmington Trust hold any General Motors debt directly?
A:Wilmington Trust does not directly hold any debt of General Motors and has no direct credit exposure to
General Motors.
Q:Who is the General Motors Stock Transfer Agent?
A: Computershare is the stock transfer agent and they can be reached at 800 331-9922.
**Issue Name CUSIP# Outstanding Indenture Date Closed Date
GM Corp 9.40% Debs due 7/15/2021 370442AN5 $299,795,000.00 11/15/1990 7/22/1991
GM Corp 8.80% Notes due 3/1/2021 370442AJ4 $524,795,000.00 11/15/1990 3/12/1991
GM Corp 7.40% Debs due 9/1/2025 370442AR6 $500,000,000.00 11/15/1990 9/11/1995
GM Corp Medium Term Notes AG3 37045EAG3 $15,000,000.00 11/15/1990 7/22/1991
GM Corp Medium Term Notes AS7 37045EAS7 $48,175,000.00 11/15/1990 12/21/1990
GM Corp 7.75% Disc Debs due 3/15/2036 370442AT2 $377,377,000.00 12/7/1995 3/20/1996
GM Corp 7.70% Debs due 4/15/2016 370442AU9 $500,000,000.00 12/7/1995 4/15/1996
GM Corp 8.10% Debs due 6/15/2024 370442AV7 $400,000,000.00 12/7/1995 6/10/1996
GM Corp 6 3/4 Debs due 5/1/2028 370442AZ8 $600,000,000.00 12/7/1995 4/29/1998
GM Corp 7.20% Notes due 1/15/2011 370442BB0 $1,500,000,000.00 12/7/1995 1/11/2001
GM Corp 7.25% Q Int Bnds due 4/15/2041 370442816 $575,000,000.00 12/7/1995 4/30/2001
GM Corp 7 1/4 Sr Notes due 7/15/2041 370442774 $718,750,000.00 12/7/1995 7/9/2001
GM Corp 7.375% Sr Notes due 10/1/2051 370442766 $690,000,000.00 12/7/1995 10/3/2001
GM Corp 7.25% Sr Notes due 2/15/2052 370442758 $875,000,000.00 12/7/1995 2/14/2002
GM Corp 4.50% Series A Conv Sr Debs 370442741 $1,150,000,000.00 12/7/1995 3/6/2002
GM Corp 5.25% Series B Conv Sr Debs 370442733 $2,600,000,000.00 12/7/1995 3/6/2002
GM Corp 7.375% Sr Notes due 5/15/2048 370442725 $1,115,000,000.00 12/7/1995 5/19/2003
GM Corp 7.375% Sr Notes due 5/23/2048 370442BQ7 $425,000,000.00 12/7/1995 5/23/2003
GM Corp 8.375% Sr Debs due 7/15/2033 370442BT1 $3,000,000,000.00 12/7/1995 7/3/2003
GM Corp 6.250% Series C Conv Sr Debs 370442717 $4,300,000,000.00 12/7/1995 7/2/2003
GM Corp 8.25% Sr Debs due 7/15/2023 370442BW4 $1,250,000,000.00 12/7/1995 7/3/2003
GM Corp 7.125% Sr Notes due 7/15/2013 370442BS3 $1,000,000,000.00 12/7/1995 7/3/2003
GM Corp 7.50% Sr Notes due 7/1/2044 370442121 $720,000,000.00 12/7/1995 6/30/2004
GM Corp 1.50% Series D Conv Sr Debs 370442691 $1,500,000,000.00 12/7/1995 5/31/2007

GM BANKRUPTCY DEADLINE

Claims Information

Parties with claims related questions concerning Motors Liquidation Company can email claims@motorsliquidation.com, or call (800) 414-9607.
http://www.motorsliquidation.com/ClaimsInformation.aspx

MOTORS LIQUIDATION COMPANY
BAR DATE NOTICE FAQS
The Bankruptcy Court has set November 30, 2009 at 5:00 p.m. Eastern Time as the deadline for creditors, including governmental units, to file Proofs of Claim based on
claims that arose prior to June 1, 2009. This deadline is commonly referred to as the
“Bar Date.” Proofs of claim must actually be received by the Debtors prior to the Bar
Date. If you do not file your Proof of Claim before this deadline, you will lose your
potential claim against the Debtors.
Who are the Debtors?
The Debtors are the following entities:
• Motors Liquidation Company (formerly known as General Motors Corporation)
• MLCS, LLC (formerly known as Saturn, LLC)
• MLCS Distribution Corporation (formerly known as Saturn Distribution
Corporation)
• MLC of Harlem, Inc. (formerly known as Chevrolet-Saturn of Harlem, Inc.)
People Who Do Not Need to File Proofs of Claim:
You do not need to file a Proof of Claim by the Bar Date if:
• Your claim is correctly listed in the Debtors’ Schedules of Assets and Liabilities
AND is not listed as “disputed”, “contingent”, or “unliquidated” AND you agree
with the dollar amount and listing of your claim as scheduled
• Your claim has already been paid in full
• You have already filed a Proof of Claim
• One of the other “exceptions” described in paragraph 2 of the Bar Date Notice
applies to you
****** Please read the Bar Date Notice carefully to determine if you must file a Proof of
Claim. You should consult with an attorney if you are unsure whether you need to
file a Proof of Claim. A copy of the Bar Date Notice is available at
www.motorsliquidation.com. The Debtors cannot tell you whether or not you
need to file a Proof of Claim.
What is a Bar Date?
A Bar Date is a deadline for filing a Proof of Claim. The Bar Date is set by the
Bankruptcy Court. If you do not file a Proof of Claim by the Bar Date, you will be barred
from asserting your potential claim against the Debtors.
When is the Bar Date?
The Bankruptcy Court set November 30, 2009 at 5:00 p.m. Eastern Time as the Bar
Date.
MOTORS LIQUIDATION COMPANY
BAR DATE NOTICE FAQS
What is a Governmental Bar Date?
Governmental units/agencies typically have their own bar date. Here, the
Governmental Bar Date is the same as the General Bar Date - November 30, 2009.
What is a Proof of Claim form?
The Proof of Claim form is a fill-in-the-blank document that must be completed by the
creditor or the creditor’s legal counsel. Instructions for completing the Proof of Claim
form are set forth on the back of the Proof of Claim form. You will also need to attach
documentation substantiating your claim when you mail your Proof of Claim form.
Why did I receive a Proof of Claim form?
The Debtors mailed the Proof of Claim form to all known and potential creditors,
including, employees, vendors, suppliers, and some customers holding warranty claims.
Where can I find a copy of a Proof of Claim form?
A Proof of Claim form can be found at www.motorsliquidation.com or at the bankruptcy
court’s website at www.uscourts.gov/bkforms.
What is a “claim”?
A “claim” is a right to payment from the Debtors. Please review the Bar Date Notice for
a more detailed description.
I received a Bar Date Notice and Proof of Claim form. Does this mean that I have a
claim?
No. The Debtors must mail the Bar Date Notice to known and potential creditors,
including employees, vendors, suppliers, and some customers holding warranty claims.
You do not necessarily have a right to payment just because you received the Bar Date
Notice and Proof of Claim form.
What if I have a claim and do not file a Proof of Claim by the Bar Date?
You must submit your Proof of Claim form by the Bar Date or you will permanently lose
your potential claim against the Debtors.
MOTORS LIQUIDATION COMPANY
BAR DATE NOTICE FAQS
What is the deadline for filing claims arising from the rejection of an executory
contract?
The deadline is the later of (i) the Bar Date, and (ii) the date which is 30 days from entry
of the order approving the rejection.
Can I get an extension?
No, the Bar Date of November 30, 2009 at 5:00 p.m. Eastern Time was set by the
Court, and all Proofs of Claim must be submitted and actually received by the Debtors
on or before this time.
Can I e-mail or fax the Proof of Claim form?
No. You must mail or hand-deliver your Proof of Claim form to one of the address set
forth below. E-mails and faxes will not be accepted.
Can I send the Proof of Claim form to the Debtors?
No.
Where do I mail my Proof of Claim form?
You must mail your Proof of Claim form to:
If by overnight courier or hand delivery to:
The Garden City Group, Inc.
Attn: Motors Liquidation Company Claims Processing
5151 Blazer Parkway, Suite A
Dublin, Ohio 43017
If by first-class mail, to:
The Garden City Group, Inc.
Attn: Motors Liquidation Company
P.O. Box 9386
Dublin, Ohio 43017-4286
Or if by hand delivery to:
United States Bankruptcy Court, SDNY
One Bowling Green
Room 534
New York, New York 10004Does my Proof of Claim need to be received or stamped by the Bar Date?
Proofs of Claim must be mailed in enough time so that they are physically received on
or before November 30, 2009 at 5:00 p.m. Eastern Time.
MOTORS LIQUIDATION COMPANY
BAR DATE NOTICE FAQS
Where can I view a copy of the Schedules of Assets and Liabilities?
Copies of the Schedules are available electronically at the Debtors’ website
www.motorsliquidation.com, and on the Court’s official docket at ecf.nysb.uscourts.gov
(a user ID and password are required and can be obtained through the PACER Service
Center at www.pacer.psc.uscourts.gov).
You can also examine the Schedules between the hours of 9:00 a.m. and 4:30 p.m.
(Eastern Time) at the office of the Clerk of the Bankruptcy Court, United States
Bankruptcy Court for the Southern District of New York, One Bowling Green, Room 511,
New York, New York 10004.
You can obtain copies of the Schedules by writing the Debtors’ claims agent:
The Garden City Group, Inc.
Attn: Motors Liquidation Company
P.O. Box 9386
Dublin, Ohio 43017-4286
Who do I call or email if I need more information?
The Debtors cannot provide legal advice, tell you how to complete your Proof of Claim
form, or discuss your Scheduled claim. However, if you have specific questions that are
not answered by the Bar Date Notice, the Proof of Claim form, or these FAQs, you may
call or email: 800-414-9607; claims@motorsliquidation.com.

Obama's deal for GM Bondholders (WSJ)

JUNE 1, 2009 Majority of GM Bondholders Back Debt-for-Equity Deal
By SHARON TERLEP and KEVIN HELLIKER
DETROIT -- General Motors Corp. moved a step closer to what it hopes will be a smooth bankruptcy process after a majority of investors holding $27 billion in the company's bonds agreed to forgive the debt for equity in the new company.

A battle with the group was one of the biggest hurdles GM faced in orchestrating a quick exit from Chapter 11.

The Obama administration plans to usher GM into bankruptcy court Monday as part of its ambitious effort to remake the American car industry at the tail end of its decades-long decline. President Barack Obama is expected to announce the government's plans for GM in a speech that will try to convey the message that the government can rebuild GM and Chrysler LLC and salvage some of the taxpayers' investments.

The auto maker, living on U.S. government loans, faces a Monday deadline imposed by the Obama administration. GM announced Friday that Chief Executive Fritz Henderson would give a press conference on Monday in New York outlining proceedings that would likely take place.

Initially, the company said getting bondholders to agree to a debt swap was its best chance for avoiding Chapter 11. But the latest plan is designed to expedite a bankruptcy filling more than to avoid it. As part of the agreement, bondholders pledged not to oppose GM's reorganization in court.


Under the plan, the Treasury would provide GM with $30 billion in loans to keep running through a bankruptcy, in addition to $20 billion already given to the company. GM won't have to repay the loans; instead, the government will turn them into a controlling stake in the company. The United Auto Workers union would end up with at least a 17.5% stake in the new company after agreeing to concessions that will save GM about $10 billion in obligations to retiree health care as well as billions more on labor costs. In exchange, GM agreed to use a soon-to-be-determined idled plant to build a small car in the U.S.

GM and the Obama administration, encouraged by Chrysler's progress in bankruptcy court over the past month, hope the company could emerge in as little as 30 days. GM, however, could still face challenges from hundreds of dealers its trying to shut down. The company also is still negotiating with Delphi Corp., its bankrupt former parts arm.

It could be six to 18 months before GM becomes a publicly traded company again, administration officials said.

Under its restructuring plan, GM will shed billions in debt, gain billions in work-force savings, will close more than a dozen factories and reduce its network of dealers.

Amid those savings, the most crucial question facing GM -- and every other player in the global automotive industry -- is when demand will return, and with what force. Since January, new-vehicle sales in the U.S. have dropped nearly 40% to an annual rate of fewer than 9.5 million units a year. At that level, even Toyota Motor Corp. is losing money.


Although General Motors is most likely headed for bankruptcy, the car maker used to be king of the road and part of the fabric of American life.
Under the restructuring plan, the new GM would break even when the rate of new-vehicle sales in America reached 10 million a year -- by industry standards a highly competitive benchmark. In the view of analysts, economic recovery will unleash pent-up demand, pushing U.S. sales far past GM's break-even point, if not within reach of the historic peak of more than 17 million new-vehicle sales back in 2000.

But a new GM won't prosper without halting a decades-long slide in U.S. market share, to 22% in 2008 from 45% in 1980. In doing so, it faces a legacy of inconsistent quality that turned large swaths of the American market toward more-reliable foreign models.

Although GM in recent years has made tremendous gains in quality and design, a big question is whether it can maintain that progress following the retirement this year of Robert Lutz as vice chairman of global product development. Legendary for his role in developing such hot models as Chrysler's Dodge Viper and the Ford Explorer, Mr. Lutz came to GM in 2001 and launched a product turnaround that garnered two North American Car of the Year Awards and propelled Buick to the top of the J.D. Power & Associates long-term quality rankings.

GM's most anticipated car-in-the-works -- the electric-powered Chevrolet Volt -- is the brainchild of Mr. Lutz. "Can we keep it going -- that's the million-dollar question," says Jack Keebler, a former Motor Trend editor whom Mr. Lutz hired to review cars during the development process.

Mr. Keebler believes the progress will continue, saying GM has passed "the tipping point."

Bondholders had until Saturday evening to voice support for a new offer that would give them a 10% share of the restructured company and warrants for another 15%.

An ad hoc committee representing major bondholders agreed to support the offer and encouraged other big investors to back the deal. A group of dissident bondholders represented by Thomas Lauria, also a lawyer for holdouts in the Chrysler case, fought against the deal. He argued that small, individual bondholders were left with no voice as the Treasury negotiated directly with GM's large institutional holders.

It was up to Treasury, which brokered the deal, to determine whether enough bondholders agreed for the offer to stand. A spokesman for the bondholder committee said approximately 54% of the bonds have indicated their support and that 975 institutions either sent support letters or gave indications of support.

The government sweetened the offer last week after bondholders overwhelmingly rejected an earlier proposal that would have left them with 10% equity in the new GM.

Analysts' estimates have bondholders coming out of the new deal with around 10 cents on the dollar, compared to as little as nothing under the old offer.

Write to Sharon Terlep at sharon.terlep@dowjones.com and Kevin Helliker at kevin.helliker@wsj.com

Printed in The Wall Street Journal, page A1

GM Reaches a Deal with Largest Bondholders (NY Times)

May 28, 2009, 9:42 am

click link for the SEC filing

G.M. Reaches a Deal With Bondholder Committee
General Motors said in a regulatory filing on Thursday that it has proposed a new deal to a committee representing many of its largest bondholders, offering up to a 25 percent stake in exchange for not opposing G.M.’s reorganization plan.
The filing also fills out many of the details of that plan, crafted under the eye of the Treasury Department.

Under the terms of the deal, G.M.’s bondholders would receive a 10 percent stake in the newly reorganized carmaker. They will also receive warrants to buy an additional 15 percent of a new G.M. if the company rises to a certain level of value.

GM bondholders unite (Bloomberg)

Chrysler Dissidents’ Lawyer Seeks GM Bondholders for New Fight


By Tiffany Kary and Christopher Scinta

May 27 (Bloomberg) -- The lawyer who represented Chrysler LLC’s dissident lenders is organizing some General Motors Corp. bondholders and plans to argue in any GM bankruptcy that the loser this time will be will be Main Street, not Wall Street.

GM, the largest U.S. automaker, faces a probable bankruptcy filing by June 1 following the refusal of bondholders to accept a 10 percent equity stake in a new company, part of a U.S.- backed plan to give the American and Canadian governments equity ownership of as much as 69 percent and a 17.5 percent trust for unions. GM bondholders hold $27 billion in claims.

“The difference with GM is that, whereas the ‘bad guys’ in Chrysler were hedge funds, who Obama called ‘speculators,’ here they’re Main Street -- individual retirees who bought bonds when they were like gold bullion,” said Thomas Lauria, a lawyer with White & Case LLP who represents Chrysler lenders fighting that company’s U.S. backed reorganization. Lauria said he is seeking to represent GM bondholders in any bankruptcy of that company.

In the Chrysler case, the dissident debt holders disbanded 10 days after the company collapsed, citing political pressure that began when U.S. President Barack Obama criticized the group. Evan Flaschen, chairman of the restructuring department at law firm Bracewell & Giuliani LLP, said uncooperative GM bondholders may be less politically vulnerable.

Retirees Versus Retirees

“The story that hasn’t been told is, this isn’t GM’s union retirees versus the bondholders. It’s retirees versus other retirees,” said Flaschen, who isn’t involved in the GM matter. While Chrysler’s dissidents lost steam because they were forced to identify themselves and faced public stigma, including alleged death threats, GM’s opponents may be harder to criticize, Flaschen said.

GM Chief Executive Officer Fritz Henderson has said the U.S. Treasury allowed the automaker very little flexibility in its negotiations with bondholders. Julie Gibson, a spokeswoman for GM, declined to comment.

“We’re stuck, we need the white knight,” said Gary Thomas, a retired auto mechanic and GM bondholder, in an interview. “I’m not asking for special treatment, I’m just asking for parity. I just feel like whatever the UAW gets, the bondholders should get.”

Roger Kerson, a spokesman for the United Automobile Workers Union, didn’t return a call seeking comment. Jenni Engebretsen, a spokeswoman for the Treasury, didn’t respond to an e-mail seeking comment.

Individual Creditors

Thomas said he has joined a group of individual creditors called GM Bondholders Unite that wants Lauria to represent them. The group is trying to gather investors and hire legal representation to get “fair and equitable treatment” in a bankruptcy, according to its Web site.

Former GM employee Jim Graves, 58, said he represents his 80 year-old mother, Vivian Floyd. Graves, of Celebration, Florida, said he plans to fight the government’s offer to return pennies on the dollar for her $100,000 investment in GM bonds.

“What it boils down to is about half a cent on the dollar at today’s price of GM stock,” he said. “It’s stunningly unfair.”

Graves calculated that his mother’s bonds may be worth 9 cents on the dollar if stock in the new GM reaches half of the company’s decade-long high of about $63 a share. Graves, part of a group calling itself The Main Street Bondholders Coalition, said he didn’t have legal counsel.

Lauria said he seeks to represent some individual GM retirees if Detroit-based GM seeks court protection. As with Chrysler, the attorney said the Obama administration is subverting the U.S. bankruptcy code.

Last Month

In the case of Auburn Hills, Michigan-based Chrysler, filed last month in U.S. Bankruptcy Court in Manhattan, Lauria argued on behalf of a group of hedge funds calling themselves “Non- TARP” lenders. He sought to distinguish his clients from recipients of taxpayer money from the Troubled Asset Relief Program who backed the U.S. plan.

The lawyer claimed that the U.S.-backed reorganization plan for Chrysler subverted the law by paying some unsecured creditors more than secured creditors, who by law, he said, should have priority.

“Obama painted the Chrysler non-TARP lenders as evil, but when you look at whose investing in these funds, it’s pension plans and mutual funds,” said attorney Michael Foreman of Dorsey & Whitney LLP. “Who’s investing in mutual funds and pensions? It’s people on Main Street.”

Lauria didn’t disclose which GM bondholders he represents. He said he would seek to have his fees paid out of the GM bankruptcy estate.

Nevin Reilly, a spokesman representing the ad hoc group of bondholders that has been negotiating with GM, declined to disclose the identities of the holders his group represents.

Junior Creditors

Workers aren’t always treated as junior creditors. The U.S. bankruptcy code specifically provides for employees to get preference over bondholders, said Richard Hahn, co-chairman of the bankruptcy practice at Debevoise & Plimpton LLP, a New York law firm, who isn’t involved in the GM negotiations.

Section 1114 of the code requires a debtor “timely pay” all retiree benefits unless the bankruptcy court orders otherwise, or the authorized representative of the recipients of those benefits agrees to other treatment, Hahn said.

In a GM bankruptcy case, Lauria said he would argue that, because unions and bondholders are both unsecured creditors, their claims should get equal treatment.

He said GM’s initial offer to bondholders would have given union-workers 12 times their recovery. Under the new U.S.- plan, bondholders will still get less than the unions, he said.

“The new paradigm seems to be that the contractual rights of creditors can be overwritten to protect politically favored entities like labor unions,” Lauria said.

‘Unfair’ Plan

Flaschen predicted that, while the U.S.-backed reorganization plan for GM may be “unfair” under the bankruptcy code, it’s bound to succeed.

“To put it crassly, you need the employees going forward, you don’t need the bondholders,” Flaschen said.

Flashchen said bondholders may argue against the U.S.- funded debtor-in-possession loan that calls for a “good GM” and a “bad GM,” claiming it violates federal bankruptcy law by being a secret plan of reorganization.

GM’s $3 billion of 8.375 percent bonds maturing in 2033 have fallen to 7.13 cents on the dollar from 21 cents at the beginning of the year and 70 cents 12 months ago, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 115 percent.

GM and the U.S. are likely to say that bondholders will get more under its plan than in a liquidation, Flaschen said.

“If you were the judge, you would be told by the government, that if GM liquidates--if you don’t do this--another 2 million people will be out of jobs,” Flaschen said. “Do you want to be the judge who decides that?”

The Chrysler bankruptcy case is In re Chrysler LLC, 09- 50002, U.S. Bankruptcy Court for the Southern District of New York (Manhattan)

To contact the reporters on this story: Tiffany Kary in U.S. Bankruptcy Court in New York at tkary@bloomberg.net and; Christopher Scinta in U.S. Bankruptcy Court in New York at cscinta@bloomberg.net.
Last Updated: May 27, 2009 17:44 EDT

Website for GM Bondholders

http://www.gmbondholdersunite.com/