If 90 percent of GM’s bondholders don’t exchange, GM’s bankruptcy is a done deal. In other words, it’s a done deal. Or, as GM CEO Fritz Henderson said, it’s “more probable.” [Download pdf here.] How’s this for investor appeal? “If we seek bankruptcy relief, you may receive consideration that is less than what is being offered in the exchange offers and it is possible that you may receive no consideration at all for your GM notes.” And here’s a wrinkle TTAC’s Ken Elias has brought to our attention: the offer treats all bondholders the same, regardless of when their notes come due. “That’s because there’s no way to negotiate with different classes of bondholders outside of bankruptcy.” Ken reckons all of this is just window dressing: “They’re just softening-up the battlefield for a Chapter 11.” And here’s the really strange bit: GM’s stock went up 40 cents on the news. As Mandark would say, Haa ha haa, haa ha ha ha ha! Only, it’s not so funny, really.
“the sale of most or substantially all of our assets pursuant to section 363(b) of the U.S. Bankruptcy Code to a new operating company, and a subsequent liquidation of the remaining assets in the bankruptcy case”
There it is! Proof outlined on paper (well, computer monitor in this case) in black and white! Good (assets of) GM will be broken apart and “sold to a new operating company” (the United States of Obama)where it can’t be touched by bondholders. Bad (damaged portions of) GM will be what’s left for creditors, bondholders, and everyone else to fight over. So our money is being used to dupe hundreds (thousands?) of people out of their money. This is what our country is coming to? Is this the beginning of the U.S.S.A.?
On WJR they are reporting 50% government ownership and 40% UAW ownership of GM.
American Leyland is born!!
Lots of taxpayer dollars for Geithners company.
You don’t even need to change the initials.
GM = Geithner Motors
I like the new choice of picture to illustrate this post, except is GM really comparable to Connery-era Bond? I would picture it more as late-period Roger Moore.
Who the heck is buying this stock…?
This is what our country is coming to? Is this the beginning of the U.S.S.A.?
GM didn’t have to ask for a bailout. They did, and it comes with conditions (and not particularly arduous ones, at that) that they’ve managed to delay and stave off for months now. That the bondholders didn’t see their holdings evapourate months ago is entirely because of the government. I’m not exactly crying for their being floated for a year or so.
Me, I wish this was a little more “USSA”. I wish the government has stepped in sooner, and acted more definitively instead of prevaricating out of fears of appearing “socialist.”
Be socialist. Kick ass. Take names.
I would picture it more as late-period Roger Moore.
I’d say more George Lazenby.
This is a classic prisoners’ dilemma for the bondholders. If a bond holder does NOT tender but the 90% tender ratio is meet then those NOT tendering would greatly improve their position – especially those with principal repayment in the near future.
The more basic concern is that the tendering bondholders get ALL stock. Fundamentally, the new diluted stock is worthless in that it will never pay a dividend. The only value would be in timing a sale properly to a “greater fool” or to a short squeeze speculator.
All-in-all, the 90% tender rate seems VERY UNLIKELY!
Who’s going to trade a senior bond position for diluted common stock?
I would picture it more as late-period Roger Moore.
I’d say more George Lazenby.
I’d say more Don Adams.
The point is to blame the whole thing on the bondholders when in reality, they are the not only the scapegoat, but the sacrificial lamb.
It doesn’t matter whether you blame management, the UAW, or the government, these are the people who are being protected at that cost of the taxpayer, stockholders, bondholders, competitors, consumers, and other creditors.
I would picture it more as late-period Roger Moore.
I’d say more George Lazenby.
I’d say more Don Adams.
I’d say more Jackie Coogan (Uncle Fester).
I always loved that exchange:
Bond: “Do you expect me to talk Goldfinger?”
GF: “No Mr. Bond, I expect you to die!”
btw Gerd Frobe’s (Goldfinger actor) english was so poor, that he was overdubbed by an englishman.
Its still a bluff. The government isn’t going to bring this to the courts, they already own the company, and can set whatever terms they want. Why let a possibly impartial judge get in the mix?