UPDATE:GM Bondholders Lobby US Lawmakers To Oppose Treasury-Backed Deal
20 Mai 2009 - 11:19PM
Dow Jones News
General Motors Corp. (GM) bondholders mounted a lobbying
campaign on Capitol Hill Wednesday to oppose a federal
government-backed plan that would wipe out much of the money they
are owed.
More than 20 GM investors planned to meet with their
representatives in Congress Wednesday and Thursday, contending they
aren't getting a fair shake in negotiations over the restructuring
of the nation's largest auto maker. The group, claiming to
represent hundreds of individual GM investors from around the
country, has held rallies in Michigan, Pennsylvania and
Florida.
Calling themselves Main Street bondholders, the investors said
they are "average" Americans who purchased GM bonds "as a part of
their financial planning for retirement, medical expenses, small
business expenses, and providing for their children's education,"
according to a statement. The meetings in Congress, the group said,
are intended to highlight their "interest in a fair and equitable
solution to GM's financial crisis."
Under a plan backed by the U.S. Treasury Department's auto task
force, GM is offering unsecured bondholders a 10% equity stake in
the company in exchange for $27 billion in debt. Treasury officials
have said deep sacrifices from all stakeholders are needed to
ensure the company's long-term viability. The bondholders deal has
met resistance.
Jim Graves, a 58-year-old software developer from Celebration,
Fla., said that under those terms, he and his mother stand to lose
most of the $100,000 in GM debt they have been counting on for
retirement.
He pointed out that compared with the unsecured bondholders,
other stakeholders, including the U.S. government, would receive
bigger equity stakes in exchange for smaller amounts of debt as
part of the GM restructuring. "It's stunningly unfair," Graves
said.
Graves said he and other investors met with staffers of Sen. Tom
Coburn, R-Okla., and Sen. Joseph Lieberman, I-Conn., who were
"sympathetic." There's no consensus among investors about what
would constitute a fair deal, Graves said, but he emphasized that
the main goal is that they are adequately represented in the
negotiations.
"We have not been able to plead our case with anyone and we've
basically had 30 days to respond to this horrific offer," he
said.
The bondholders group has called for a meeting with the task
force. A Treasury spokeswoman didn't immediately respond to a
request for comment Wednesday.
GM spokesman Greg Martin declined to comment on talks with
bondholders, but said, "It was very clear from the task force that
we needed to take more aggressive actions to restructure operations
and reduce liabilities and debt on our balance sheet."
GM is hoping to complete deals with stakeholders by a
government-imposed June 1 deadline to avoid a bankruptcy
filing.
-By Josh Mitchell, Dow Jones Newswires; 202-862-6637;
joshua.mitchell@dowjones.com