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GM meets bond holders and union to nut out financing deal
By Serena Saitto |
February 9, 2009, Monday
|
Print Edition
Print Edition
GENERAL Motors Corp executives, advisers, bond holders and union officials plan to meet this week in Detroit to negotiate the government-ordered debt restructuring of the auto maker, two people close to the talks said.
The discussions, said to involve all global debt holders, follow informal talks as part of the Detroit vehicle maker's plan to reduce US$27.5 billion in unsecured debt to about US$9.2 billion. They asked not to be named because the meetings, scheduled for today and tomorrow, are private, Bloomberg News reported.
GM is under pressure to show progress in negotiations with bond holders and the United Auto Workers union ahead of a February 17 status report to the US Treasury as part of an agreement to keep the US$13.4 billion that the Treasury lent to GM to keep it out of bankruptcy. GM has pledged to cut dealers and brands.
"As we continue our restructuring and work toward meeting the terms of the term loans, GM is providing certain necessary information to key stakeholders' advisers so they can appropriately evaluate the decisions they will have to make," GM spokeswoman Renee Rashid-Merem said. "Given the confidential nature of those discussions, we won't discuss any specifics."
UAW spokesman Roger Kerson did not immediately return a phone call seeking comment.
Pacific Investments Management Co, manager of the world's biggest bond fund, resigned from the bond-holder committee last month, said Bill Gross, Pimco's co-chief investment officer. The defection of Pimco was a "serious blow" to GM's exchange offer, KDP Investment Advisors Inc said at the time.
The bondholder committee includes San Mateo, California's Franklin Resources Inc and Fidelity Investments of Boston, said a person with knowledge of the situation.
If GM can't convince the bond holders and UAW to agree to new terms, the government could force GM to return the loans or convert them into funding for a government-backed bankruptcy. GM has said a bankruptcy may lead to liquidation because it would further erode sales, which fell 49 percent in its home market in January.
The discussions, said to involve all global debt holders, follow informal talks as part of the Detroit vehicle maker's plan to reduce US$27.5 billion in unsecured debt to about US$9.2 billion. They asked not to be named because the meetings, scheduled for today and tomorrow, are private, Bloomberg News reported.
GM is under pressure to show progress in negotiations with bond holders and the United Auto Workers union ahead of a February 17 status report to the US Treasury as part of an agreement to keep the US$13.4 billion that the Treasury lent to GM to keep it out of bankruptcy. GM has pledged to cut dealers and brands.
"As we continue our restructuring and work toward meeting the terms of the term loans, GM is providing certain necessary information to key stakeholders' advisers so they can appropriately evaluate the decisions they will have to make," GM spokeswoman Renee Rashid-Merem said. "Given the confidential nature of those discussions, we won't discuss any specifics."
UAW spokesman Roger Kerson did not immediately return a phone call seeking comment.
Pacific Investments Management Co, manager of the world's biggest bond fund, resigned from the bond-holder committee last month, said Bill Gross, Pimco's co-chief investment officer. The defection of Pimco was a "serious blow" to GM's exchange offer, KDP Investment Advisors Inc said at the time.
The bondholder committee includes San Mateo, California's Franklin Resources Inc and Fidelity Investments of Boston, said a person with knowledge of the situation.
If GM can't convince the bond holders and UAW to agree to new terms, the government could force GM to return the loans or convert them into funding for a government-backed bankruptcy. GM has said a bankruptcy may lead to liquidation because it would further erode sales, which fell 49 percent in its home market in January.
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