GM Bondholders To Receive Even Worse Terms

According to MC Cabrera, GM's bondholders are about to get a substantial shaft: a new proposed offer to them would include:

- $0 new cash
- $0 new debt
- 10-20% of the company stock.

This is a dramatic deterioration from the old proposed offer (which bondholders were not happy with in the first place):

- 8 cents cash
- 16.5 cents new debt
- 90% of GM stock

The revised terms are based on the auto task force's determination that due to deteriorating economic conditions, the initial offer to bondholders had been far too generous. Bondholders are guaranteed to balk at this offer, with the government likely to end up getting a super secured position via a DIP, thus cramming down the bonds even more in bankruptcy... Of course, the tables would turn if the administration truly has an ulterior motive of equitable subordination of its claim as ZH speculated.