Reports are correct that, if bankruptcy is filed, General Motors will seek a “363” deal in court. Such a deal has the company split into two portions; one comprised of the “good” assets (let’s call it GoodGM for ease) and one filled with the “bad” assets (call it BadGM). During the proceedings, BadGM would be given over to the holders of GM’s debt to be liquidated to raise money to pay off former GM’s debt. Note that GM has approximately $29 Billion in debt; $7 Billion of which is secured by Saturn assets (including Spring Hill, TN plant). The government’s $13.4 Billion loan to GM is also considered secured debt, with a vast amount of assets up as collateral.
GoodGM would reemerge fairly quickly from the bankruptcy process (if everything goes to plan). The U.S. government would release GM, GoodGM and BadGM of the $13.4 Billion in debt, but as a trade-off take a 100% ownership in GoodGM upon reemergence. Shortly after the new company emerges from bankruptcy, the U.S. government (currently the owner of GoodGM) would issue an initial public offering (IPO) on the new company and it would become a public company much like the current General Motors, though the current GM stock would be canceled in bankruptcy. Most of the money raised from the investment of the new company would likely go to the VEBA fund for the UAW.
read full article on Zero Hedge
Today’s bondholder meeting is likely to shed light on whether or not bankruptcy is the only answer. Stay tuned to GMInsideNews.com for the latest out of today’s bondholder meetings.
Sphere: Related ContentRelated posts:
Post a Comment