"We are deeply concerned with today's decision by GM and the auto task force to offer only a small, inequitable percentage of stock to its bondholders in exchange for their bonds," the bondholders said in a statement quoted by just-auto.com.
The bondholders are concerned that the offer is "a blatant disregard of fairness for the bondholders" and call it neither reasonable nor adequate. They even went as far as accussing GM of showing "political favoritism of one creditor over another".
"The current offer is neither reasonable nor adequate. Both the union and the bondholders hold unsecured claims against GM. However, the union's VEBA would receive a 50% recovery in cash and a 39% stake in a new GM for its $20bn in obligations; while bondholders, who own more than $27bn in GM bonds and have the same legal rights as the unions, would only receive a mere 10% of the restructured company and essentially no cash," stated the committee.
The punch line is that all of the bondholders find the offer to be extremely risky, based on a legally questionable bankruptcy turnaround. They feel that the right path should have been the engagement of GM's lenders and workers in the negotiations.
"The offer was made unilaterally, without any prior discussion or negotiation with bondholders and in spite of repeated calls for dialogue. We are deeply concerned that GM waited until late April to make its offer."
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