GM bondholders to board: Pound sand

posted at 11:20 am on May 27, 2009 by Ed Morrissey

General Motors announced this morning that its bondholders had rejected a plan to give almost 40% of a restructured GM to the UAW while they got only 10% for their investment.  GM needed 90% of its bondholders to agree to the government-imposed deal for it to win approval and keep the company out of bankruptcy.  Instead, GM says they got “substantially less” cooperation from their creditors:

General Motors (GM) said Wednesday that not enough bondholders agreed to an exchange offer, which expired at midnight Tuesday, to make the deal go through. GM’s board of directors will meet shortly to discuss the next step.

The automaker was attempting to persuade bondholders to trade in $27.2 billion in unsecured public debt notes in exchange for a 10% stake in the restructured automaker. GM needed 90% of bondholders to agree to the plan. On Wednesday, the automaker said the amount of notes turned in were “substantially less than the amount required by GM to satisfy the debt reduction requirement” set forth by the U.S. Treasury.

“Since these conditions, as well as certain other conditions, have not been satisfied, the exchange offer will not be consummated,” the company said in a statement released Wednesday morning.

GM needed to get the deal done in order to qualify for more loans from the U.S. government. Now, it is facing filing for bankruptcy any time before June 1, its deadline set by the government to get certain restructuring moves completed.

This deal looked even worse for the bondholders than the one crammed down the throats of Chrysler’s creditors.  At least they wound up with cash, albeit at 29 cents on the dollar, face value.  GM’s creditors would end up with 10% of the company for its $27 billion investment, while the UAW would get 39% for a much lower loss on a renegotiation of pension obligations, similar to that in the Chrysler deal.  Not surprisingly, the creditors want more compensation for a bigger investment, and will rely on the bankruptcy process to secure their rights.

However, as the Obama administration demonstrated during the Chrysler liquidation, they’re not terribly concerned about staying within the lines of bankruptcy law, especially when they can pressure creditors to cough up assets to the unions.  How long will it be before these bondholders get seminars from Steve Rattner and the auto industry task force on the “madman theory of the Presidency” and its implications for heartless “speculators” such as themselves?


Related Posts:

Breaking on Hot Air

Blowback

Trackbacks/Pings

Trackback URL

Comments

You bondholders better hire security for your families. As the car czar said: “We know where you live.”

Vashta.Nerada on May 27, 2009 at 11:25 AM

A lot of the bonds are held by funds that are retirements for Michigan teachers union and other unions.
People need to know who is cheating whom.

I wouldn’t want my retirement moneys taken down the toilet to appease obama and the UAW.

seven on May 27, 2009 at 11:25 AM

“We want names Barry Owe!”
“Make ’em famous!”
“Let us know who they are and we’ll sharpen the pitchforks!”

So sayeth ACORN and all the other little Obama lemmings.

BardMan on May 27, 2009 at 11:26 AM

I can’t imagine how any large company will ever raise money through securitized bonds again.

This blew a hole in that market that won’t be forgotten.

AnninCA on May 27, 2009 at 11:28 AM

Thank goodness the bond holders are standing up for their legal rights under the lending contract. I would record all conversations with anyone from the government. Any kind of threat would be dealt with through the media. Could I claim self-defense if I shot a white house thug who threatened me and my family?

riverrat10k on May 27, 2009 at 11:30 AM

“Don’t think we’re not keeping score.”

Watch your azz, bondholders, you are about to see tour buses full of union thugs rolling up to your front doors.

Bishop on May 27, 2009 at 11:31 AM

seven on May 27, 2009 at 11:25 AM

Teacher unions bailing out car unions, so who will bail out the teacher unions? I guess under the BO administration thinking it serves those teacher unions right for being such “heartless speculators.”

Vera71 on May 27, 2009 at 11:33 AM

Any kind of threat would be dealt with through the media.

riverrat10k on May 27, 2009 at 11:30 AM

You were going so well, until you typed that.

Vashta.Nerada on May 27, 2009 at 11:33 AM

I wonder if any GM dealers donated to Republicans?

Evil Pundit on May 27, 2009 at 11:34 AM

It is all for nothing, no sane person will buy a car from a company owned by the Gov and UAW.

Ex-GM buyer.

P.S.
Both of my cars are paid for and I have no plans to buy new any time soon.
When I do it will be a Ford.

TheSitRep on May 27, 2009 at 11:34 AM

You people make me sick, Dear Leader Obama sends Acorn out to those persons homes to shame them into conceding he knows all. The pitchforks, bats, molotov cocktails are just demonstrate the form of employment the Acorn worker is in. For instance, an Acorn worker holding a pitchfork and yelling “kill kill kill” on the front lawn is probably just an urban farmer who is a bit angry at all the greed. We should give in to his solid experience in all these matters and throw our money on the floor as he walks past.

I cannot believe these bond holders actually want their rights enforced according to the constitution. They are probably all Republicans.

Africanus on May 27, 2009 at 11:36 AM

They’ll cave in when the threats start.

Why would anyone ever want to invest in an American company again?

Knucklehead on May 27, 2009 at 11:37 AM

This is all part of Obama’s plan to make GM competitive and viable on it’s own! He doesn’t want to own the car companies but he’s been forced into this by Booooosh and these actions will ensure that the government shouldn’t have difficulty finding investors to come in and buy the companies from them. /SARC

gwelf on May 27, 2009 at 11:37 AM

Finally somebody somewhere is acting rationally! What a relief!

I am impressed by the courage of the bondholders but please learn to play hardball just as the Obama administration does. If they threaten you, go to press, there’s Fox at least, keep a recording device with you always, take names, don’t give in, embarrass the administration, keep yourselves safe.

promachus on May 27, 2009 at 11:37 AM

Teacher unions bailing out car unions, so who will bail out the teacher unions? I guess under the BO administration thinking it serves those teacher unions right for being such “heartless speculators.”

Vera71 on May 27, 2009 at 11:33 AM

We’ll be bailing out the teacher unions sooner rather than later.

myrenovations on May 27, 2009 at 11:38 AM

Evil Pundit on May 27, 2009 at 11:34 AM

Yes, in fact. The dealership that got closed in Alaska, it’s owner is a big GOP donor.

promachus on May 27, 2009 at 11:38 AM

Chrysler slams Indiana State Treasurer’s demands

http://www.reuters.com/article/marketsNews/idUSN2539345020090525

It will be the FEDS against the states…..

izoneguy on May 27, 2009 at 11:43 AM

They are obviously evil capitalists that DHS needs to round up.

Star20 on May 27, 2009 at 11:44 AM

It seems that Obama’s destroying the producers and investors of the country, leaving only his political class, unions full of unemployed workers, and huge government bureaucracies presiding over industries that don’t exist.

Chaos anyone?

BuckeyeSam on May 27, 2009 at 11:44 AM

Any kind of threat would be dealt with through the media.

riverrat10k on May 27, 2009 at 11:30 AM
You were going so well, until you typed that.

Vashta.Nerada on May 27, 2009 at 11:33 AM

I thought the same thing so added the weapons sentence!

riverrat10k on May 27, 2009 at 11:45 AM

It is all for nothing, no sane person will buy a car from a company owned by the Gov and UAW.

Ex-GM buyer.

TheSitRep on May 27, 2009 at 11:34 AM

Yes, you will…. eventually. This is only Step 1. When you won’t willingly buy their cars, other competitors will be eliminated OR your tax dollars will subsidize their cars (i.e., less discretionary income) to such an extent that they will more or less force you to buy the cars they want you to have.

PrincipledPilgrim on May 27, 2009 at 11:46 AM

BuckeyeSam on May 27, 2009 at 11:44 AM

It seems that Obama is destroying the producers and investors of the country, leaving only his political class, unions full of unemployedgovernment workers, and huge government bureaucracies presiding over industries that don’t exist.the government has seized.

Chaos anyone?

Yes, it’s time to get it on.

izoneguy on May 27, 2009 at 11:47 AM

Being in Motown suburb, here’s my prediction for the happy ending. During the next UAW bargaining contract, Ford, while bargaining with their direct competitor (UAW) will agree to buy the assests of Chysler and GM from the UAW and Uncle Obama, thus making one US car manufacturer while giving nothing in return other than taking these toxic assests from the government and a cash siphon from the UAW.

It will be both histiric and brilliant.

booter on May 27, 2009 at 11:48 AM

Anyone doubt that Obama is a radical socialist?

Phil Byler on May 27, 2009 at 11:49 AM

Obama commands: Release the howling mobs. Grab your pitchforks and torches. Stone their children and murder their wives. Let not one stone remain open another.

Kuffar on May 27, 2009 at 11:51 AM

It seems that Obama is destroying the producers and investors of the country…

It is not just him. He is the front man but it is a machine. Are you hearing any Republican voices in opposition? Nope, all you hear from them is the sucking sound from Colon’s…, uh, well that’s redundant.

Mark Levin has it right. It is not Democrat v. GOP. It is statists v. us. And 99% of the establishment is statist!

PrincipledPilgrim on May 27, 2009 at 11:51 AM

Ford, while bargaining with their direct competitor (UAW)

booter on May 27, 2009 at 11:48 AM

That alone should give pause. Ford is obligated by law to employ UAW workers, at least in Michigan and Indiana. UAW will now own a majority of their domestic competition. So, the UAW workers at Ford will be working against their own interest. Does anyone else see the dissonance here?

Vashta.Nerada on May 27, 2009 at 11:54 AM

As Obama would say, these guys will be getting a lesson on what the IRS can do….

Joking, of course….

drjohn on May 27, 2009 at 11:56 AM

It is all for nothing, no sane person will buy a car from a company owned by the Gov and UAW.

Ex-GM buyer.

TheSitRep on May 27, 2009 at 11:34 AM

Yes, you will…. eventually. This is only Step 1. When you won’t willingly buy their cars, other competitors will be eliminated OR your tax dollars will subsidize their cars (i.e., less discretionary income) to such an extent that they will more or less force you to buy the cars they want you to have.

PrincipledPilgrim on May 27, 2009 at 11:46 AM

Nothing matters if the government runs it. Look at the post office. Chrysler & GM will never have to make a profit again. The goal is to run the rest of the auto industry into the ground. Eventually Chrysler & GM will be merged and called “United Motors”.
There will be no competition and if you want a car you will have to buy from “United Motors”…soon all cars will be banned that are over a few years old.

izoneguy on May 27, 2009 at 11:59 AM

Its about time the private sector told the “O” thieves to shove it.

This administration has shown no respect for private property (of any kind) and expects investors to grovel at the governments feet while taking it in the shorts on their money they’ve invested in private business.

Let it all go to bankruptcy court before letting the government give control to the unions that drove the business into the ground to begin with.

Speakup on May 27, 2009 at 12:02 PM

This is not going to end well.

rockmom on May 27, 2009 at 12:02 PM

OK, these bondholders include the teacher’s union, correct? What the heck happens when all of Obama’s supporters are not getting equal sugar from the ultimate Sugar Daddy (Obama)?
In other words won’t unions getting the shaft revolt?

ORconservative on May 27, 2009 at 12:03 PM

The ultimate goal, is it not, to get us all out of our cars and onto the light rail?

If so, all of these moves make perfect sense.

myrenovations on May 27, 2009 at 12:03 PM

Chrysler slams Indiana State Treasurer’s demands

http://www.reuters.com/article/marketsNews/idUSN2539345020090525

It will be the FEDS against the states…..

izoneguy on May 27, 2009 at 11:43 AM

Legally the cahpter 11 should be run under an independent trustee. The dealers are post petition and will be dealt with hopefully before fiat closes the deal.
The Fiat deal is becoming very unlikely. chrysler is deteriating and of course all the rest of the dealers are in jeopardy.
The Dodge Rahm is a car wreck and most likely will be totalled.

seven on May 27, 2009 at 12:04 PM

Anyone doubt that Obama is a radical socialist?

Phil Byler on May 27, 2009 at 11:49 AM

Racist.

spmat on May 27, 2009 at 12:04 PM

OK, these bondholders include the teacher’s union, correct? What the heck happens when all of Obama’s supporters are not getting equal sugar from the ultimate Sugar Daddy (Obama)?
In other words won’t unions getting the shaft revolt?

ORconservative on May 27, 2009 at 12:03 PM

The teachers unions will be bought off in the form of more federal money for hiring more teachers which leads to new union members to pay into the teacher pension.

myrenovations on May 27, 2009 at 12:04 PM

Obama to bondholders: “Hey, I’m the only One standing between you and the pitchforks!”
Government extortion.

Christian Conservative on May 27, 2009 at 12:04 PM

In some respects both the Chrysler and GM dealings are charades. No matter what the complicated dealings are the one certainty is they will both get all the money they need.

If you recall this whole affair started off at less than 20 billion in loans. Now as we soar past 100 billion in commitments they tell us we will have 70% ownership in the new GM. What’s more interesting is the union took cash vs ownership. That says it all.

Meanwhile the bondholders will get zero unless a miracle happens in the bankruptcy hearings. The Chrysler example can’t be too reassuring.

Why is no one saying anything? Because a “Billion” no longer means anything once we went to “Trillions”. All perspective is gone. When we had perspective–last fall–Bush had to put off dealing with the auto companies because he knew the public would not ok billions in bailouts.

On a another note the well known Marc Faber says the road to Zimbabwe is inevitable.

http://www.businessinsider.com/faber-100-sure-us-will-have-zimbabwe-style-hyperinflation-2009-5

patrick neid on May 27, 2009 at 12:05 PM

By the way, GM’s auto business has been insolvent since 2000. Until 2007 it was being kept alive by the profits from GMAC. It was common to hear GM referred to as “bank on wheels” and a “financial services company that happens to have a bad auto business attached to it.” GM made a bet on financial services and lost. Its auto business has been in the toilet well before the financial meltdown and the buyers’ revolt tanked its sales. Very different situation from Chrysler, which has always been first and foremost a car company and only had a small financial arm to finance its cars and dealers.

There is no reason for the UAW or GM management to be rewarded for their bad bets on financial services.

rockmom on May 27, 2009 at 12:07 PM

Mark Levin has it right. It is not Democrat v. GOP. It is statists v. us. And 99% of the establishment is statist!

PrincipledPilgrim on May 27, 2009 at 11:51 AM

Yes, Mark is right, yet David Frum is out there asking for another verbal beating.

UAW will sell their interests so they may soak the new majority owners. You guys know who that will be?

Africanus on May 27, 2009 at 12:08 PM

I am going to be buying a Ford when it’s time to trade in my Silverado.

What a shame.

rollthedice on May 27, 2009 at 12:09 PM

Good for the bond holders, and best of luck. Stand up to the fascist-in-chief.

rbj on May 27, 2009 at 12:10 PM

GM needed to get the deal done in order to qualify for more loans from the U.S. government. Now, it is facing filing for bankruptcy any time before June 1, its deadline set by the government to get certain restructuring moves completed.

This could be a blessing in disguise. If this goes to bankruptcy court, the court might not favor the UAW as much as Obama’s car czar, and the bondholders might get a better deal. Maybe they’ve learned their lesson after the Chrysler deal got shoved down their throats.

Steve Z on May 27, 2009 at 12:11 PM

The stock market crash has soured people on stocks. These extortion deals with Chrysler and GM are going to sour people on corporate bonds too. Where does the government think corporations are going to be able to raise capital for future growth? How will any new jobs be created when nobody wants to invest in debt or equity of U.S. corporations anymore?

rockmom on May 27, 2009 at 12:20 PM

Where does the government think corporations are going to be able to raise capital for future growth? How will any new jobs be created when nobody wants to invest in debt or equity of U.S. corporations anymore?

rockmom on May 27, 2009 at 12:20 PM

You are assuming some things about this administration that do not exist.

Vashta.Nerada on May 27, 2009 at 12:22 PM

Another factor complicating the decision making of GM’s bondholders: Many large investors hold insurance policies on their bonds known as credit default swaps. Such policies would reimburse bondholders in the event of a “credit event” like a bankruptcy filing.

Investors who hold credit default swaps on GM debt stand to make about $2.33 billion if the insurance contracts are triggered, according to the Depository Trust & Clearing Corp.

Lubben said holders of such swaps “would do better in bankruptcy because the bankruptcy is going to trigger their (insurance) contracts.”

Wethal on May 27, 2009 at 12:22 PM

I don’t like having hate….because I feel it’s a waste of energy…and emotion.

However, I hate what Obama is doing to our beautiful country. No, it’s not perfect, but it’s still pretty damn great, in my opinion.

All in this insane quest for a utopia, that has never, doesn’t, and will never exist. A fairytale.

Grow up Peter Pan, and deal with reality. This is the USA. Rather than change it, why don’t you go live, where all your ideals apply?

capejasmine on May 27, 2009 at 12:23 PM

Investors who hold credit default swaps on GM debt stand to make about $2.33 billion if the insurance contracts are triggered, according to the Depository Trust & Clearing Corp.

Lubben said holders of such swaps “would do better in bankruptcy because the bankruptcy is going to trigger their (insurance) contracts.”

Wethal on May 27, 2009 at 12:22 PM

Watch Obama find, or make up, or use thug tactics, to grab up all that money.

capejasmine on May 27, 2009 at 12:24 PM

The teacher’s union members are now getting an education into matters that they failed to teach their students. Lessons regarding such things as the Constitution, the Bill of Rights, and capitalism.

They are also getting a wakeup call regarding the history lessons they failed to teach and how that relates to the person they voted into the office of POTUS.

How’s that working out for them?

Yoop on May 27, 2009 at 12:26 PM

Ford is obligated by law to employ UAW workers, at least in Michigan and Indiana. UAW will now own a majority of their domestic competition. So, the UAW workers at Ford will be working against their own interest. Does anyone else see the dissonance here?

Vashta.Nerada on May 27, 2009 at 11:54 AM

Non-union Ford employees (if there are any) should be livid about this.

Isn’t there some kind of law (RICO or anti-trust) that would prevent UAW members from working at Ford, since they own part of the competition? At the very least, it has to be a violation of Ford Motor Company’s ethics policy.

UltimateBob on May 27, 2009 at 12:36 PM

In this morning’s AZ Republic “news’ section A, a piece by AP writer Dan Stumpf characterized the GM bondholders as ‘recalcitrant’. Websters’s defines recalcitrance as “to be stubbornly disobedient”.

Glad to see the AP is keeping it’s opinions where they should be; right in the middle of straight news stories.

DrW on May 27, 2009 at 12:37 PM

I own a Honda and a Nissan, I won’t consider buying GM or Chry products as long as they are under the guidance of ‘Teh One’.

belad on May 27, 2009 at 12:39 PM

Anyone doubt that Obama is a radical socialist?

Phil Byler on May 27, 2009 at 11:49 AM

“Oh no no, you musn’t say that. It isn’t true, and even if it is, they won’t like hearing it. No no, you can’t say that”
Michael Medved Bennett

james23 on May 27, 2009 at 12:42 PM

Forget about Ford. Obama will crush it because they didn’t allow government to take it over.

The only thing left for Obama to do is eliminate the foreign competition. He’ll probably impose a tariff and outrageous “green” requirements to price them out of the market.

Daggett on May 27, 2009 at 12:44 PM

Nothing matters if the government runs it. Look at the post office. Chrysler & GM will never have to make a profit again. The goal is to run the rest of the auto industry into the ground. Eventually Chrysler & GM will be merged and called “United Motors”.
There will be no competition and if you want a car you will have to buy from “United Motors”…soon all cars will be banned that are over a few years old.

izoneguy on May 27, 2009 at 11:59 AM

Not necessarily. Ford, Toyota, and Honda are independent businesses that make and sell cars in the United States, and the U.S. Government could never take over Toyota or Honda, because the owners are Japanese.

If the Government tried to pump enough money into GM and Chrysler to under-sell Ford, Toyota, and Honda, there would be a taxpayer revolt, which could give Republicans control of the House in 2011, which could then vote to cut off all Government support to GM and Chrysler, which would then have to sink or swim–cut costs or go into true bankruptcy.

I saw this happen in France in the 1980’s and early 1990’s. Socialist President Francois Mitterrand had nationalized French car-maker Renault in the early 1980’s, which was crippled by high union wages and frequent strikes by the Communist CGT union. At the same time, French competitors Peugeot and Citroen merged and remained private, and negotiated tough concessions from the unions. Within a few years, people realized that Peugeot/Citroen (renamed PSA) cars were much cheaper and more reliable than Renaults, and PSA remained profitable while Renault sales plummeted. Then, Conservatives gained a majority in Parliament, and Renault was privatized (sold) to a consortium of foreign car-makers and French banks, with small French investors allowed to buy shares, and within two years Renault became profitable, and its cars are of comparable quality to PSA cars.

Nationalizing a car company only works if there is a monopoly of car manufacturers in a country. In the USA, there are three major private car manufacturers left (Ford, Toyota, and Honda), and plenty of room for market backlash. Even some of the GM and Chrysler workers might find greener pastures working for Ford, Toyota, or Honda as they increase their market share, since people will hesitate to buy GM or Chrysler cars if they’re not sure of getting spare parts when the cars need repair.

Steve Z on May 27, 2009 at 12:44 PM

I own a Honda and a Nissan, I won’t consider buying GM or Chry products as long as they are under the guidance of ‘Teh One’.

belad on May 27, 2009 at 12:39 PM

My Nissans are 1000% better than any GM I ever owned….
Chrysler is a joke, always was….
When I rent a car and they want to rent me a Chrysler I say hell no.
I try to rent a Toyota whenever possible.
Until Obama passes a law that says all rental companies have to buy GM/Chrysler.

izoneguy on May 27, 2009 at 12:48 PM

Nationalizing a car company only works if there is a monopoly of car manufacturers in a country. In the USA, there are three major private car manufacturers left (Ford, Toyota, and Honda), and plenty of room for market backlash. Even some of the GM and Chrysler workers might find greener pastures working for Ford, Toyota, or Honda as they increase their market share, since people will hesitate to buy GM or Chrysler cars if they’re not sure of getting spare parts when the cars need repair.

Steve Z on May 27, 2009 at 12:44 PM

I hope you are right. I guess I could always buy a Harley if Obama outlawed other car makers.

izoneguy on May 27, 2009 at 12:51 PM

OBAMA IS A LIAR AND A CROOK AND HE SHOULD MOVE TO N KOREA

rone5847 on May 27, 2009 at 1:03 PM

Will these bondholders hold out for more than a day? If so, they’ll beat the previous record of angry bondholders set by the Chrysler folks.

hawksruleva on May 27, 2009 at 1:09 PM

UPDATE 1-Chrysler slams Indiana State Treasurer’s demands
The Indiana pension funds have filed court papers requesting that an examiner be appointed to investigate Chrysler’s business decisions, and that the company be placed in the hands of a Chapter 11 trustee who can act independently of the government. The funds also mounted a challenge to the company’s plan in U.S. District Court.

Last best hope for the Fifth Amendment.

petefrt on May 27, 2009 at 1:12 PM

This won’t be the end. They’ll never GET that hearing. Obama will turn loose the ACORN thugs with pitchforks and start characterizing these bond holders as “greedy hedge fund speculators”.

Somehow the union, which invests nothing and expects something isn’t greedy. But then liberals and logic never go together.

wildcat84 on May 27, 2009 at 1:17 PM

I think theres another wrinkle in this whole thing the media has not mentioned yet.

If I invest in a 401K or 403B, and they then PURPOSFULLY loose money? I can sue…

If its just a bad decision… hard to do, but they have a fiduciary responsibility to do the best they can…

Its clear that its in the best interest of the BOND HOLDERS to go to bankruptcy…. any other action and the bond holders are going to be sued by THEIR investors…

Romeo13 on May 27, 2009 at 1:22 PM

Yoop at 12:26
Exactly. When my daughter was in 8th grade they had a patriotism unit, but I don’t think the Declaration of Independence or the US Constitution were described or compared and contrasted with alternate government forms.

I’ve got a letter ready to send to the administrators and school board, showing them what the communists have said they were going to do in order to take over this country, and what communism would look like. One of the documents I reference is “Current Communist Goals”, a document added to the Congressional Record in 1963. It can be found at http://www.crossroad.to/Quotes/communism/communist-goals-congressional.htm

justincase on May 27, 2009 at 1:52 PM

This is a big step in the plan to destroy capitalism.

It worked with Chrysler. If they can get away with it here, then bonds are defunct as a way for private businesses to raise capital.

And that will probably drive investors out of equities altogether.

And since stocks are the basis of capitalism, game over.

Communists win.

notagool on May 27, 2009 at 1:52 PM

And that will probably drive investors out of equities altogether.

And since stocks are the basis of capitalism, game over.

Communists win.

notagool on May 27, 2009 at 1:52 PM

That is clearly the goal.

I refuse to believe that someone can get themselves elected a US Senator and then President and not know what the effect of allowing contracts to be voided or unilaterally restructured at the whim of the government on behalf of a lobby that contributed heavily to it’s election will have on the private economy.

It’s as if Obama doesn’t WANT a private economy. It’s either that or he’s the most ignorant President in history, there isn’t a 3rd possibility.

wildcat84 on May 27, 2009 at 1:56 PM

And the bondholders of GM are more organized and they know where you live also Stevie Baby. The teacher`s unions, fireman`s union and, all the other unions are GM bondholders. We`ve lined up the unions against each other. Two can play this game too Dr. Utopia.

BE CAREFUL WHAT YOU WISH FOR. YOU JUST MIGHT GET IT!

Jayrae on May 27, 2009 at 2:20 PM

The leg breakers must have been busy elsewhere. The Admin will undoubtedly dispatch them forthwith to threaten the GM Bondholders just like they did to Chrysler’s.

TheBigOldDog on May 27, 2009 at 2:58 PM

How heartening to hear you use one of my dear departed dad’s favorite phrases. Thank you.

MarkT on May 27, 2009 at 3:06 PM

So GM is out of business, bankrupt, and WE now own it.

Now GM cars will be made by the unions under the guises of the Government.

Hasn’t this been done before?

Union + Government?

Yes it has! It was called the

U-GO!

DSchoen on May 27, 2009 at 5:11 PM

I wonder if any GM dealers donated to Republicans?

Evil Pundit on May 27, 2009 at 11:34 AM

Check this link that shows Chrysler Republican dealers:

http://directorblue.blogspot.com/2009/05/red-alert-did-campaign-contributions.html

Blackhawk45 on May 27, 2009 at 5:19 PM

The deal actually got worse when the UAW accepted a different compensation package for the $10 billion in cash that was supposed to go into the VEBA (out of the original $20 billion overall). That envisioned the UAW accepting $6.5 billion in prefered stock not counted in the total ownership percentage that pays a 9% dividend (or $585 million/year), a $2.5 billion note that pays an effective 11.1% annual interest rate over 8 years (which, if GM survives until 2017, would net the UAW $4.14 billion), and 17.5% of the common stock with a low-price warrant to buy an additional 2.5% in exchange for the remaining $1 billion in VEBA liability.

I ran the numbers last night, and assuming that the $1 billion-17.5% common-share UAW stake is a 1-1 valuation, the market capitalization of GM would be just over $5.7 billion had that deal gone to fruition at that precise moment. That would have made the 10% stake that the bondholders would have received worth just $570 million, or close to a 95% haircut on the face value of the bonds.

Given that, at the close of yesterday, GM’s market capitalization was $837 million, I have no confidence that would hold.

Of course, now that the bondholder swap has been withdrawn, it’s water under the bridge flowing over Niagra Falls. The question is, who gets the 10% stake that would have gone to them?

steveegg on May 27, 2009 at 5:32 PM

There’s a slight error in my previous comment – the haircut that the bondholders would have taken had the exchange gone through would have been just short of 98%.

steveegg on May 27, 2009 at 5:39 PM

Teacher unions bailing out car unions, so who will bail out the teacher unions? I guess under the BO administration thinking it serves those teacher unions right for being such “heartless speculators.”

Vera71 on May 27, 2009 at 11:33 AM

We’ll be bailing out the teacher unions sooner rather than later.

myrenovations on May 27, 2009 at 11:38 AM

You don’t know how right you are. This is the Chicago Double-Tap, which was made necessary because the UAW health-care plan does not qualify for rescue by the federal-run and taxpayer-funded Pension Benefit Guaranty Corporation.

The teachers’ pension funds, however, do qualify for rescue by said Pension Benefit Guaranty Corporation.

steveegg on May 27, 2009 at 5:55 PM

It’s as if Obama doesn’t WANT a private economy. It’s either that or he’s the most ignorant President in history, there isn’t a 3rd possibility.

wildcat84 on May 27, 2009 at 1:56 PM

I vote for ignorant, seasoned with one of the most developed case of narcissism that has been seen in some time.

The MSM gushes over the intelligence of Obama. Personally, I just do not see the evidence for it. He finds it impossible to put a coherent idea forward, off the cuff. It must be written down and presented from that for him to even begin to communicate.

He is making it up as he goes along. He is not as smart as he thinks he is, but he spends all his time on the road attempting to convince his followers of the meme.

Yoop on May 27, 2009 at 6:17 PM

Who is Obama’s facism Tzar?

Johan Klaus on May 27, 2009 at 6:36 PM

Yes it has! It was called the

U-GO!

DSchoen on May 27, 2009 at 5:11 PM

ROFL.

I can tell you this, I will NEVER purchase a GM or a Chrysler made car ever again. Not just because of this, but the two worst cars I’ve ever owned were made by them. The best? Fords, both of them I’ve owned.

So, until they go on the dole, or start making Obama mandated “eco-Trabants” I’m a Ford man.

If Ford falls under the Hussein regime, I switch to Toyota.

wildcat84 on May 27, 2009 at 6:51 PM

Bush had to put off dealing with the auto companies because he knew the public would not ok billions in bailouts.

Uh, I (as a member of the public) don’t think we OK’d anything. Only our “so-called” representatives. All that voted for this should be tossed out of office, and maybe into jail.

IrishEyes on May 27, 2009 at 6:56 PM

“It is all for nothing, no sane person will buy a car from a company owned by the Gov and UAW.

Ex-GM buyer.

P.S.
Both of my cars are paid for and I have no plans to buy new any time soon.
When I do it will be a Ford.”

TheSitRep on May 27, 2009 at 11:34 AM

Buy a Honda, thousands of Americans in Ohio and in other parts of the US will thank you, the UAW will not, but I care not for the union, only the poor slob paying the dues.

Bruce

M-14 2go on May 27, 2009 at 9:05 PM