Sunday, March 22, 2009

GM Bondholders are Unhappy Campers

Reuters is reporting that the unofficial GM bondholders' committee sent a joint letter to the Presidents Task Force on Automobiles, PTFOA (not to be confused with PITFA), objecting to the plan to convert 2/3 of the bondholders' interest into equity in the NEW General Motors. There's a not so subtle threat that if the bondholders don't get their way, they'll throw the General into involuntary bankruptcy.

If you believe GM's financial statements, the bonds have a book value of about half their face value, and these bondholders think that 33% plus a chunk of ownership with new government money is a worse deal. Personally, I think they're bluffing.

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