GM's New Escape Route: Partial Nationalization
Under the proposed offering, investors holding $27.2 billion of GM bonds would swap those bonds for 10 percent of the equity shares of the restructured company. The UAW would get up to 39 percent of the company in return for half of the $20 billion GM owes to a health fund for retired workers. Current shareholders would get 1 percent of the new shares.
Proposal Recap:
- 50% Federal Government Owned
- 39% Worker Owned
- 10% Investor Ownership
- 1% Current shareholder stake
Bolded is the only part I agree with - finally this looks like bankruptcy. Here’s the ridiculous part though. Notice that the bondholders are giving up $27.2 billion of debt in exchange for a 10% stake, but yet the UAW gets 39% of the company for only a $10 billion concession? This does not seem right to me - reeks of political undercurrents.
Source: enteekaygee
