国际英语新闻：GM pushed closer to bankruptcy filing

CHICAGO, May 27 (Xinhua) -- With bondholders refusing to swap debt for a 10-percent stake, the largest U.S. automaker General Motors Corps. has been pushed closer to a bankruptcy filing.

    According to GM sources, the number of bondholders who agreed to swap debt for a 10-percent stake in the company was "substantially less" than the 90 percent mandated by the U.S. Treasury Department, which has loaned GM 19.4 billion U.S. dollars in a taxpayer money bailout.

A GM inflatable sign is seen during the Barrett-Jackson auto auction in West Palm Beach, Florida April 11, 2009

GM's offer, which expired at midnight on Tuesday, was widely viewed as unlikely to tempt GM's unsecured bondholders to exchange about 24 billion U.S. dollars in debt for a 10-percent piece of the restructured automaker.

    The failed exchange could force GM to file Chapter 11 bankruptcy by Monday, the deadline by which the automaker was required to restructure and reach money-saving concessions with the United Auto Workers union and bondholders.

    In a statement issued on Wednesday, GM said: "the GM Board of Directors will be meeting to discuss GM's next steps in light of the expiration of the exchange offers."

    According to reports, in early trading, shares of GM were down 17 cents, or 11.7 percent, to 1.27 U.S. dollars.

    It was reported that there had been a small hope that GM could avoid a bankruptcy filing when the United Auto Workers union made concessions to GM. The auto union disclosed on Tuesday that it would take a 20-percent stake in GM, down from the original plan of 39 percent. That seemingly freed 19 percent of the Detroit-based company's shares to sweeten the pot for its recalcitrant bondholders.

    As the bondholder deal did not go through, the equity freed by the auto union 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 percent. But it now could be as high as 69 percent.

    GM's offer was expected to fail considering a committee representing some of GM's largest bondholders have called the offer unfair and countered with a proposal that would give them a 58-percent stake in the company.

A General Motors dealership is seen in Vienna, Virginia, May 27, 2009. General Motors Corp moved closer to filing the largest U.S. industrial bankruptcy after a crucial bond exchange proposal failed and as officials in Germany neared a decision on which company would take over GM's European brand, Opel.

According to experts in the U.S. auto industry, regardless of the results, GM needs to file Chapter 11 bankruptcy to become a profitable company. A bankruptcy filing would help GM restructure debt, shrink its dealer network, shed uNPRofitable assets and dispose of machinery and equipment.

    If GM files bankruptcy, the automaker is expected to receive about 30 billion U.S. dollars in debtor-in-possession financing and exit financing.

    Bondholders rank below GM's 6 billion U.S. dollars in senior secured debt and the government's nearly 21 billion U.S. dollars in debt, so in a liquidation of GM they would get nothing or something unbelievably small, a person familiar with the matter told Detroit News.

    According to reports, the U.S. government, even if it receives a 70-percent equity stake in GM, would not exercise day to day control over GM's operations or make decisions on where GM's headquarters would be placed.

    The Treasury will not appoint government employees to GM's board, but is helping GM to reconstitute its board of directors and will have the right to appoint some directors, as it does with the deal it has with Chrysler LLC.

    It is reported that the Obama administration, in its planning for a GM bankruptcy if no deal is reached with bondholders, is prepared to lend the company an additional 30 billion U.S. dollars, bringing the total U.S. investment in the automaker to 45 billion U.S. dollars.