General Motors – Distressed Debt Exchange Offer ($27b)

Jorge Queiroz — Wed, 06 May 2009 20:53:04 +0000

General Motors – Distressed Debt Exchange Offer ($27b)
General Motors has announced it is commencing public exchange offers for $27 billion of its unsecured public notes. General Motors Nova Scotia Finance Company, a subsidiary of GM, is jointly making the exchange offers with GM with respect to its pound sterling denominated notes. The exchange offers are a vital component of GM’s overall restructuring plan to achieve and sustain long-term viability and the successful consummation of the exchange offers will allow GM to restructure out of bankruptcy court.

Here is an executive summary from the press release:
(1) Commencing exchange for $27B of unsecured notes
(2) Exchange is vital to restructuring out of court
(3) 225 shares per $1,000 of bond principal.
(4) Cash will be paid out for accrued interest. According to the press release, USD interest accruals range anywhere from $7.5 per $1000 bonds (less than a 1 point) to $43 per $1000 bonds (4.3 points)
(5) If GM does not receive enough exchange by June 1, 2009, will file for bankruptcy
(6) Exchange expires 11:59PM, Tuesday May 26th
(7) Inserting a call option on non-USD notes
(8) Consummation is conditioned upon: Treasury approval (they believe they need 90% of principal to tender to get approval), U.S. Treasury issued 50% of pro forma common stock in exchange for cancellation of at least 50% of GM’s outstanding treasury debt and cancellation of the Treasury Warrants, evidence that the Treasury will provide an additional $11.6B of funding that GM believe it will need after May 1st, 2009, VEBA modification, U.S. Treasury and VEBA ownership not more than 89% of Pro Forma stock, binding labor modifications.

For more information see -http://www.gm.com/corporate/investor_information/exchange-offer/

IBGT » commencing public

General Motors – Distressed Debt Exchange Offer ($27b)