NEWS: Last Gasp for GM

US government may take controlling share of General Motors

GM have offered the US government a controlling stake of more than 50% in efforts to stave off bankruptcy. Re-financing it's $62 billion in debts in a massive "debt for equity" swap is the only measure left before calling in the courts to intercede.

Under the deal, the government and unions would get a combined stake of 89% in the company through an issuance of new stock, with bondholders taking a further 10%. Existing shareholders would end up with ownership of just 1%.

The future of GM looks far from secure- for the deal to go ahead, the offer must be accepted by 90% of bondholders – an extreme test of GMs persuasive skills, and even then, would not avoid for the company the mass closures, slashing of jobs and the demise of its Pontiac model , which the company inevitably faces.
Chief Executive Fritz Henderson admitted the chances of success are far from guaranteed and he conceded bankruptcy had become "more likely" in recent weeks.

Another article on Bloomberg paints an even more pessimistic picture, "according to a person familiar with the committee representing creditors."

“This is an offer that’s designed to fail,” said Kip Penniman, an analyst at fixed-income research firm KDP Investment Advisors in Montpelier, Vermont. “To get 90 percent of them to agree to such a deal where there’s no cash, no other debt and pure equity while leaving the union VEBA arrangement unchanged from previous considerations is absurd.”