GM bondholders support revised bond swap offer

Financial Crisis Posted on

A group of major General Motors Corp bondholders on Thursday gave its support for a revised bond exchange, saying the option of litigation in bankruptcy court was too risky.

"The Ad Hoc Committee of GM bondholders supports the revised offer from GM and believes that when contrasted with the alternative -- uncertain and costly bankruptcy court litigation -- that it represents the best alternative for bondholders in the current difficult and dire situation," the committee said in a statement.

Since the first offer was made on April 27 for bondholders of $27 billion of debt to accept a 10 percent equity stake for those claims, "circumstances have materially changed that make today's offer more attractive," the statement said.

The committee of about a dozen of the biggest GM bondholders said it "continues to remain troubled by preferential treatment" that the United Auto Workers union received versus other bondholder classes.

However, "rejecting this offer in the expectation that the bondholders will do better in a litigated outcome was a risk the Committee is unwilling to take," the statement said.

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