Ad Hoc Committee of GM Bondholders Supports Revised GM Offer
NEW YORK--The Ad Hoc Committee of GM Bondholders today issued the following statement in support of the revised offer to all General Motors bondholders.
“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. Since the initial offer was made on April 27th, circumstances have materially changed that make today’s offer more attractive. The Treasury Department has said that it will advance substantial additional funds to GM and convert approximately $40 billion of this into common equity in the new GM, vastly improving the balance sheet of the company and substantially increasing its equity value. The Treasury Department is converting approximately $30 billion of additional debt into equity, relative to what was disclosed in the original S4. Given these factors, the allocation of 10% of common equity in the new GM, plus the opportunity to participate in the upside of the company through warrants to purchase 15% of the fully diluted equity in the new GM, gives the bondholders the opportunity to recover a greater portion of their original investment than was previously offered. While the Committee continues to remain troubled by preferential treatment that the UAW VEBA is receiving compared to the bondholder class – 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.”
