Bondholders agree to General Motors deal

Posted: May 31, 2009 in News

General Motors’ bondholders have agreed to a company plan to swap their debt for an ownership stake as high as 25 percent, sources in Detroit said.

Bondholders controlling just more than half of the company’s $27.2 million in bond debt agreed to the deal , sources close to the negotiations told The New York Times.

The deal allows the ailing automaker to file for bankruptcy protection and have a more orderly restructuring, The Times reported.

Under the plan, the United Automobile Workers union, via its retiree healthcare fund, would receive a 17.5 percent stake in a restructured GM and warrants to buy an additional 2.5 percent, sources told The Times. Bondholders initially would receive a 10 percent stake, along with warrants for 15 percent.

The federal government, which has loaned GM nearly $20 billion, could end up owning as much as 70 percent of the company, The Times reported.

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