NEW YORK – General Motors Corp. bondholders want a majority stake in the restructured automaker in exchange for forgiving their claim to $27 billion of GM debt, a committee representing the bondholders said Thursday.
The committee said under the proposal GM’s bondholders would take a 58 percent stake in a reorganized GM. That would leave a union-run health care trust with a 41 percent stake and current equity holders with 1 percent.
The proposal leaves the U.S. government without an equity stake in the new GM and saves taxpayers $10 billion, the bondholders said. They said it is fairer than GM’s proposal because it allocates equity to the United Auto Workers union and to the bondholders based on how much money they are owned.
The counterproposal comes in response to GM’s offer earlier this week to give its bondholders 225 shares for every $1,000 held in bonds. Bondholders have criticized the plan, saying it would leave them with just pennies on the dollar for their 10 percent equity stake.
The U.S. government, under GM’s plan, would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness. The UAW, for its part, would get a 39 percent stake in exchange for $10 billion in payments to its health care trust in stock.
GM must bring 90 percent of bondholders on board with the plan for it to work, the company said.
Getting its bondholders to agree to a so-called debt-for-equity exchange is a key component of its restructuring plan. GM is racing to restructure by a government-imposed deadline at the end of May, at which point it would be eligible for additional federal aid.
The Detroit-based company has been living on $15.4 billion in government loans and is seeking another $11.4 billion. If GM can’t put all the pieces in place by June 1, the struggling company could go into bankruptcy protection.
Chrysler LLC, meanwhile, is facing a Thursday deadline to arrange its own restructuring. Whether it would do so in time remained an open question early Thursday, as some of its secured debtholders balked at a plan to forgive the company’s debt in exchange for $2.25 billion in cash.
Shares of GM closed Wednesday at $1.81.