GM Prepares for Bankruptcy Announcement

 

Updated from 2:37 p.m. EDT

Kimberly S. Johnson
AP Auto Writer

DETROIT -- GM(GM Quote) was making final preparations Sunday for its bankruptcy protection announcement after bondholders accepted a sweetened deal, smoothing the way for the company's reorganization.

A statement Sunday from a group of large, institutional bondholders said 54% of GM bondholders agreed to exchange their unsecured bonds for a 10% stake in a newly restructured company, plus warrants to purchase a greater share later. Their acceptance is seen as critical in moving the company through bankruptcy quickly.

GM and the Treasury Department, which has been guiding the Detroit automaker toward a rescue plan that will give taxpayers more than a 70% stake in the company, were quiet on the bondholders' decision.

Although GM has not confirmed it will seek bankruptcy protection, Chief Executive Officer Fritz Henderson has scheduled a news conference Monday morning in New York. President Barack Obama is also expected to give a speech addressing the Detroit automaker's fate.

The Treasury Department must find that there is sufficient acceptance for the deal to move forward. In a previous bond exchange offer, the Treasury demanded participation of 90% of bondholders, representing a debt exchange of $24 billion.

In Germany, the government agreed Sunday to loan GM's Opel unit $2.1 billion, a move necessary for Magna International(MGA Quote) to acquire the company.

The Canadian auto parts supplier Magna will take a 20% stake in Opel and Russian-owned Sberbank will take 35%, giving the two businesses a majority. GM retains 35% of Opel, with the remaining 10% going to employees.

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