So, without going into why the feds would turn GM into the latest Amtrak, I'd like to comment on this raw deal. According to the article, the United Auto Workers health care obligation is $20 billion by GM. Bondholders are owed $27 billion. However, when the politicians are all done with this fictional bankruptcy, the union owns 39% of GM and the bond holders own 10%. That sounds a lot like political favoritism to me.
Folks, this means that the UAW and the taxpayer own and control 90% of this once proud symbol of American know how. For what? If capitalists couldn't run GM, how is a union gonna do? It's not their game.
Christopher
GM Offers U.S. a Majority Stake
Bondholders Balk at Plan; UAW Poised to Get Big Stakes in General Motors, Chrysler
By JOHN D. STOLL and SHARON TERLEP
General Motors
Corp. outlined a new turnaround plan that would leave the U.S.
government controlling the auto maker, as it set up a showdown with
bondholders that could determine whether the company lands in
bankruptcy court.
Under the plan, GM is asking the Treasury Department for an additional $11.6 billion in loans, on top of the $15.4 billion it has already received. It envisions giving the government at least half ownership of the company as payment for half of the loans.
At the same time, GM said it would use stock instead of cash to pay off half the $20.4 billion it owes a United Auto Workers fund to cover retiree health care. That stock would leave the union owning about 39% of GM.
The upshot would be the transformation of a troubled American icon, leaving it in the hands of the government and its main union. The situation, fraught with complications and potential conflicts, comes on top of the U.S. government taking stakes in banks and insurer American International Group Inc.
Also Monday, the UAW and Chrysler LLC disclosed that the union would own 55% of that restructured car maker, while Fiat SpA would get 35% and the U.S. and lenders would own the rest.
GM told bondholders it wants to swap up to $27 billion in unsecured debt for a 10% company stake. If bondholders tender less than 90% of the debt, GM is prepared to file for bankruptcy protection, Chief Executive Frederick "Fritz" Henderson said.
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