GM Ad-Hoc Panel: Government Deal Gives 25% Stake With Warrants
30 May 2009 - 5:37AM
Dow Jones News
The ad-hoc committee representing 20% of General Motors Corp.'s
(GM) bondholders said the deal struck with the government and the
automaker gives them a 25% stake including the warrants in the new
company.
Under the deal, the bondholders would get a 10% stake up front
and warrants to buy a 15% stake - for a total of a 25% stake if and
when the reorganized company's market capitalization reaches $30
billion - implying a return of 28 cents on the dollar for
bondholders.
"This is specifically negotiated; 25%," said attorney Andrew
Rosenberg of Paul, Weiss, Rifkind, Wharton & Garrison LLP, who
is representing the committee.
Rosenberg also said that the deal protects unsecured
bondholders' claims against other unsecured claims in the
bankruptcy process. He said that if other claims come in between $7
billion and $14 billion, the government will give up some of its
equity stake to maintain the bondholders' final equity position. He
said the addition would come in the form of more equity up front
instead of warrants, and added that the government contemplates
claims of substantially less than $7 billion.
The committee's representatives have spent the day attempting to
convince other stakeholders that this deal is economically
attractive. Rosenberg said the committee held an open conference
call for bondholders earlier Friday, and since then support for the
deal - due by 5:00 pm ET Saturday, per the Task Force offer - is
pouring in.
"We can't keep up," Rosenberg said.
-By Andrew Edwards, Dow Jones Newswires; 201-938-5973;
andrew.edwards@dowjones.com