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Friday, 05 Dec 2008

General Motors eyes debt swap

Reuters | Monday, 01 December 2008
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Reuters

GM MOVES: General Motors Corp is pushing some bondholders to swap their debt for equity, as chief executive Rick Wagoner tries to keep the automaker out of a Chapter 11 bankruptcy, according to reports.

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General Motors Corp is pushing some bondholders to swap their debt for equity, as chief executive Rick Wagoner tries to keep the automaker out of a Chapter 11 bankruptcy that would likely cost him his job, The Wall Street Journal reported, citing people familiar with the plan.

GM's board has also ratcheted up pressure on Wagoner in recent weeks, the newspaper said, citing several people familiar with the matter.

While George Fisher, the lead independent director, supports management, more than one-fourth of the automaker's 14 directors have privately expressed frustration with Wagoner, the newspaper said, citing people close to the board. Topping the list of potential successors is Chief Operating Officer Fritz Henderson, the newspaper said, citing these people.

GM was not immediately available for comment.

Last week, the US Congress rejected pleas from GM, Ford Motor Co and Chrysler LLC for US$25 billion of loans, and asked the automakers to submit detailed turnaround plans.

GM is scrambling to deliver a plan by Tuesday. Lawmakers are scheduled to reconvene during the week of December 8 to review any plan and consider aid.

A debt swap could leave many unsecured debtholders with big losses. Many GM bonds have been trading at small fractions of their face values, suggesting that many investors are uncertain about the automaker's ability to pay its debts.

 


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