This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Bondholders Give Thumbs Down to GM Offer

Updated from 8:09 a.m. EDT

General Motors (GM) said the amount of notes tendered by its bondholders under its debt-exchange offer was less than required by the U.S. Treasury to satisfy the automaker's debt reduction requirements.

The exchange offer expired at midnight on Tuesday. "Since these conditions, as well as certain other conditions, have not been satisfied, the exchange offers will not be consummated," GM said in a statement Wednesday.

Shares of GM were trading 16 cents lower, to $1.28 shortly before 11 a.m. Wednesday.

Since not enough bondholders agreed to swap their debt for company stock it appears that GM is headed for bankruptcy protection. GM had asked bondholders to exchange $27 billion in unsecured debt for 10% of the company's stock.

GM was given a deadline of June 1 by the U.S. government to restructure or begin the process of bankruptcy.

GM said its board will meet to discuss GM's next steps because of the expiration of the exchange offers.

The company has received $19.4 billion in federal loans.

The Obama administration has said it only would provide more funds if 90% of the bondholders, as well as unionized workers, agreed to concessions that substantially reduced GM's costs.

On Tuesday, the United Auto Workers said it would take a 20% stake in the automaker, down from the original plan of 39%. That seemingly freed 19% of GM's shares to sweeten the pot for the bondholders.

But because the bondholder deal didn't go through, the equity freed by the UAW deal now apparently will go to the U.S. government, which may have to commit billions more for GM's restructuring in court.

The government's stake in the company originally was to be 50%, according to GM's regulatory filings. But it now could be as high as 69%. The Canadian government also could get equity for up to $8 billion in aid for the automaker.

Copyright 2008 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.97 +100.83 0.59%
S&P 500 1,998.98 +14.85 0.75%
NASDAQ 4,552.7590 +33.8570 0.75%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs