GM bondholders vote to exchange claims

Washington Post

WASHINGTON — General Motors faced its last obstacle to a quick and orderly bankruptcy Saturday, as its lenders voted on exchanging their claims for a stake in the restructured automaker.

Under orders from the Treasury Department, the company offered bondholders a 10 percent stake in the new GM, and has added to the offer warrants for another 15 percent stake. In voting to accept the proposal, bondholders would also agree not to oppose GM should it pursue a sale under Section 363 of the bankruptcy code, which allows the automaker to sell its assets and create a new company.

The number of bondholders that agreed to the exchange was unknown as of the 5 p.m. deadline yesterday for voting. But an unofficial group of bondholders, who hold about 20 percent of GM’s debt, accepted the terms, saying the deal allowed them to recover more of their original investment than they could otherwise.

“In terms of the bankruptcy process, we expect the likely bondholder assent to smooth the process,” Brian Johnson, a Barclays Capital analyst, said in a note.

GM is now speeding toward its day of reckoning, as the automaker will likely file for bankruptcy protection Monday.

Last week, lenders rejected a previous offer to drop their claims in exchange for a 10 percent stake in the company. GM had asked at least 90 percent of the lenders to agree.