GM bondholders to propose new deal
— -- General Motors's bondholders plan to present a counteroffer to President Obama's auto task force in Washington on Thursday that would give them control of the carmaker, Bloomberg News reported late Wednesday, citing to a person familiar with the committee representing creditors.
Bondholders are proposing they get a 51% in the reorganized carmaker, the union health-care fund get a 41% share, and common shareholders get 1%, the person said. This structure would enable the U.S. Treasury to be paid back and avoid nationalization of GM, according to the person, who declined to be identified because the negotiations are private.
The bondholder committee plans to reject that offer, the person told Bloomberg.
Earlier Wednesday, individual bondholders asked for more say in GM's restructuring.
Among them was Chris Crowe, a retired electrician from Denver and part-time home inspector, who tied up $13,000 in General Motors bonds a few years back as college savings for his son. He thought it was safer than putting money in stocks and safer than investing in a company that didn't have a long, respected history.
"It just doesn't seem fair," Crowe said. "I understand there are only so many pieces of the pie, but they are just giving us crumbs."
Individual bondholders are owed about $5 billion, just a slice of GM's total debt, but a big deal for small investors.
Marilyn Jegerlehner, a retired secretary from Monroe, Wis., relies on the monthly interest payments from the bonds she bought with her husband, Ralph, for expenses such as property tax and insurance payments.
They're already cutting back, preparing for the cutoff of the payments. The closest they come to eating out is sharing a $5 sandwich from Subway.
"We have played by the rules all of our lives, and we feel we are being ignored," she said. "We are calling on the administration to look out for us, too."
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