• May 27th 2009 at 8:58AM
  • 48
General Motors is teetering ever closer to the brink of bankruptcy today, as the automaker's exchange offer for its outstanding debt fell "substantially" short of the necessary take-rate. GM had offered some $27.2 billion of its unsecured public notes to its bondholders, but the offer expired at noon yesterday without having the minimum tender amount met. The U.S. Treasury Department had mandated that at least 90 percent of bondholders would have to agree to swap their shares for a 10 percent stake in the GM, but far too few failed to take GM up on its offer, effectively negating any swap at all under the conditions of the tender offer.

A number of major bondholders had originally countered with an offer to give up their stocks in exchange for a markedly larger stake in the company – 58 percent – but with the lion's share of the company already promised to the United Auto Workers' VEBA fund and to the U.S. government, the bondholder issue was widely expected to fail.

As a result, many are expecting GM to file for Chapter 11 bankruptcy by Monday, with The Detroit News reporting that GM's board of directors scheduled to meet earlier than that to discuss whatever options they may have left. Official GM press release after the jump.

[Sources: General Motors; The Detroit News | Image: Bill Pugliano/Getty]


GM Exchange Offers for Outstanding Public Debt Expire

DETROIT - General Motors Corp. (NYSE: GM) today announced the expiration of its exchange offers for $27.2 billion of its unsecured public notes and the related consent solicitations that were commenced on April 27, 2009. No further tenders of notes will be accepted and any notes previously tendered pursuant to the exchange offers will be promptly returned to the tendering holders.

The exchange offers expired at 11:59 p.m. EDT on May 26, 2009, at which time the principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury, to meet the debt reduction objectives under its viability plan, or to meet the minimum tender condition of the exchange offers as required by the U.S. Treasury. Since these conditions, as well as certain other conditions, have not been satisfied, the exchange offers will not be consummated.

Due to the foregoing, GM has also cancelled the meetings of noteholders with respect to each series of non-US dollar-denominated notes which were scheduled to take place on May 27, 2009 in relation to certain amendments proposed in connection with the exchange offers.

The GM Board of Directors will be meeting to discuss GM's next steps in light of the expiration of the exchange offers.

Forward Looking Statements

This document contains "forward-looking statements." Such statements are based on the current expectations and assumptions of GM management, and as such involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those now anticipated. To better understand these risks and uncertainties, holders of notes and other readers are encouraged to read carefully GM's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 which was filed March 5, 2009 and GM's Current Report on Form 8-K filed on May 14, 2009 which updates and supersedes the Annual Report in relation to Item 6 - Selected Financial Data, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, and Item 8 - Financial Statements, GM's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 which was filed on May 8, 2009 and other GM filings with the Securities and Exchange Commission (SEC), all of which can be accessed free of charge at the websites of the SEC (at www.sec.gov) and GM (at http://www.gm.com/corporate/investor_information).

General Motors Corp. (NYSE: GM), one of the world's largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 235,000 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.

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    • 1 Second Ago
      • 6 Years Ago
      I wonder if Barack Obama's automotive task force will target GOP voter owned dealerships with GM like they did Chrysler?

      What? You didn't hear anything about that from MSNBC?

      Doesn't surprise me.

      • 6 Years Ago
      A lot of people here don't know what they are talking about.
      • 6 Years Ago
      Great pic. GM and BO, what a cute couple!
      • 6 Years Ago
      Sadly, it's about time. Here's hoping it comes out of it a better company.
      • 6 Years Ago
      @ John

      Using your words, commenting on the earlier statement of "At this point I trust Obama and UAW more than I would trust ANY business leader":

      It was this kind of thinking that got Lenin, Hitler, and Castro in power. Only a fool would think it couldn't happen again. Before you bashers chime in, I suggest you pick up a history book

      Well, I did pick up a history book. Here's a VERY short list of corporate scandals where the rich and powerful decided having 'more' wasn't enough, they wanted it all.

      A. Anderson
      World Com

      Do you still trust them?

        • 6 Years Ago
        You see, Rick, if you dislike Obama enough, he can be taking us down the path to emulating both the most extreme far-Right society AND the most extreme far-Left society... AT THE SAME TIME!

        Also, he uses Borg nanoprobes.
        • 6 Years Ago

        "Here's a VERY short list".

        That's the problem it IS a very short list. There are thousands of coporations of all sizes in the US both domestic and foreign that play by the rules AND give something back to their communities. Maybe if we bought back lynchings you would feel better if we hung Ken Lay from the nearest tree.
        • 6 Years Ago
        Corporations never got 6 million people killed in the gas chambers or 30 million killed in gulags of Siberia.

        Weak comparison.
        • 6 Years Ago
        Hey, wasn't our previous Vice President the CEO of one of those companies?
        • 6 Years Ago
        Weak comparison. How about the useless war in Iraq? How many killed there? I stand by my comparison.

        Borg nanoprobes...LOL
      • 6 Years Ago
      They need to shut down both GM & C, then liquidate both companies.

      These two will never recover, nobody I know even considers either when shopping for a new car.
        • 6 Years Ago
        Sorry If I came off harsh. I live in Boston and I agree that there are very few people looking at american cars. It seems like many people are just stuck in the mind set that US cars are still making cars like they did in the 80's through the early 90's.
        Either way this whole situation sucks for the car industry as a whole.
        • 6 Years Ago
        Ron: I'm in NYC, I see sh*t loads of GM vehicles.

        NYC = Brooklyn Bronx Staten Island Queens Manhattan. The Metro New York Area includes Northern NJ, Southern Ct., Westchester and Rockland counties, all combine to form the NYC motoring scene.

        Next time you're out in NYC, the following vehicles are all made by GM.

        Cadillac: Escalade, I see one at least every 70 seconds that I am on the streets of Manhattan. Possibly, only Yellow cabs and NYPD cars are more present.

        GMC/Chevy: Yukon,Tahoe and Suburban prowl the streets of Brooklyn, Bronx and Harlem & Essex county NJ. Very popular with Cops, Correction Officers, thugs and wanna be thugs. Roughnecks don't drive Ridgelines.

        Most of the folks that you know probably fall into the status buying crowd. These are the folks who will buy anything with a foreign (especially European) badge. Coincidentally, I know some of those folks too. The really funny ones, are the ones that buy Range Rovers knowing how poor a reputation they have, then cry about it.

        Dude, the car culture is regional. Subarus and Volvos always sold well in New England, and that was long before the WRX ever existed. Subarus and Volvos are not as popular in Georgia and Tennesee, does that mean they don't sell?
        • 6 Years Ago
        I just purchased a 2009 Cobalt SS and a 2009 Saturn VUE. Not because they were American, but because they were he best in their segment. The VUE is better than the Honda CR-V, the Ford Escape and the Toyota RAV4.

        The Cobalt SS cannot be beat in terms of a fun SCC.

        I also just put my mom into a 2009 Lexus IS...it was the best in it's segment.

        Saying that no-one considers GM is an ignorant statement. They sold 9 million vehicles in 2007. They still outsell Toyota in the US.
        • 6 Years Ago
        Saying nobody considers them is ridiculous.
        GM still sells TONS of vehicles all over the world. Their trucks and SUVs are the best out there, AND people are still buying both. Chrysler still sells tons of Jeeps and Mini-Vans. I for one have had a pre-order in for a 2010 Camaro for months. Both companies make some great products and if it weren't for the current economic downturn they would still be making money and more slowly restructuring their companies to stay competitive. Even Toyota is loosing money.
      • 6 Years Ago
      If was never 'if' but when! Gimme Motors is just about legally bankrupt now but it was factually bankrupt years ago and productwise bankrupt decades ago.
      • 6 Years Ago
      I hope the performance cars like Corvette,Camaro, CTS-V won't be axed.
      • 6 Years Ago
      @ John

      Also while the execs at Fannie/Freddie did a poor job, Fannie/Freddie don't actually lend $$ to homeowners and instead, buy mortgages from mortgage makers (like Countrywide or commercial banks) and thus aren't responsible for the shoddy lending practices done by greedy mortgage companies like Countrywide or banks like Bank of America (note that small, community or regional banks didn't get greedy and are in good shape, if not thriving).

      Fannie/Freddie actually initially purchased higher grade paper from the mortgage makers until companies like Countrywide threatened to totally bypass them for Wall. St. firms unless they bought the bad paper w/ the good.

      Wall St. firms controlled HALF of the secondary mortgage market and were too busy making heaps of $$ repackaging/bundling the mortgages as "investment vehicles" to care about the underlying finances (this nonchalant attitude, in turn, was the impetus for thre mortgage makers to make increasingly careless loans since they were making heaps of $$ selling the mortgages to the Wall St. firms as well as Fannie/Freddie).

      Anyway, the whole implosion of the secondary mortgage market/securitization of mortgages, while painful, would have been more like the S&L scandal (tho, a bit larger in scale) of the 1980s/90s than what actually occurred.

      What ultimately killed commercial banks like Bank of America, I-banks like Bear Stearns/Merrill, and hybrids like Citibank (as well as AIG which insured these financial institutions) were the supremely risky BETS they made w/ credit default swaps and other financial derivative instruments (we're talking being leveraged at 35:1 ratio) and the world economy (aside from China and India which had tough banking regulations forbidding their banks from engaging in such risky "investments") w/ the resulting credit crisis.

      Maybe you should actually get more than a superficial, kneejerk knowledge of what actually happened instead of just rehashing the crap spewed by Rush, Hannity and rest of that ignorant cabal.
      • 6 Years Ago
      It looks like the Treasurer of Indiana is one of the flies in the ointment (if you view the bk/recovery plan as a fix that is). It turns out they oh so *wisely* invested money in Chrysler bonds for their state teacher's pension fund, Major Moves highway projects, and state police pension.

      Being a Hoosier, I'm not too surprised that they did the equivalent of burning their money. It will probably turn out they though they'd get some sweetheart deal with a bankruptcy....gambled...and lost big time. Looks like they'll get back 28 cents on the dollar of my tax money....awesome.

      Here's the linky from my local newspaper.
        • 6 Years Ago
        "I'm in NYC, so maybe that makes a difference. "
        You need to open your eyes and meet more people then. There are tons of GM vehicles out in nyc.
      • 6 Years Ago
      Told you so. Morons. Thanks for wasting all that money. Could've at least doused it in gas and set it on fire. At least it would have kept someone warm.
      • 6 Years Ago
      Here is a little tid-bit of info for all you Obummer lovers out there.

      NEW YORK, May 26 (Reuters) - A lawyer for Chrysler dealers
      facing closure as part of the automaker's bankruptcy
      reorganization said on Tuesday he believes Chrysler executives
      do not support a plan to eliminate a quarter of its retail

      Lawyer Leonard Bellavia, of Bellavia Gentile & Associates,
      who represents some of the terminated dealers, said he deposed
      Chrysler President Jim Press on Tuesday and came away with the
      impression that Press did not support the plan.

      "It became clear to us that Chrysler does not see the wisdom
      of terminating 25 percent of its dealers," Bellavia said. "It
      really wasn't Chrysler's decision. They are under enormous
      pressure from the President's automotive task force."

      So, he wants to save jobs, does he?

      16,000 jobs lost each day since ‘stimulus’ became law,

      and now this.

      Its going to be a long 4 years.
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