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DETROIT/NEW YORK (Reuters) – General Motors Corp has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the largest-ever U.S. industrial bankruptcy by the end of this month.

The largest U.S. automaker had so far failed to gain anywhere near the 90 percent of bondholder support desired to stave off bankruptcy, two sources familiar with the discussions told Reuters on Tuesday. Bondholders have until midnight to make their final decision on the tender.

As of midday Tuesday, the source said the company had only "low-single-digit" interest from bondholders.

Reuters' sources said GM will likely file for bankruptcy some time after midnight Tuesday, but before June 1.

The failure to gain bondholder support is a critical disappointment for GM, the largest U.S. automaker and once considered the standard-bearer of all U.S. manufacturing. In the 1950s, a popular ad for the automaker proclaimed that "What's good for General Motors, is good for the USA."

"I would say this is a sound rejection of an unsuitable offer," said Pete Hastings, a credit analyst at Morgan Keegan who has followed GM. "I have been saying for some time that this thing was dead on arrival and we were just waiting for the doctor to pronounce it dead. Now that's happened."

As various deadlines near for the automaker, officials at the United Auto Workers' union will gather to hear how many U.S. factory jobs GM will cut as part of its restructuring.

Union officials representing 54,000 GM workers are scheduled to meet to prepare for a quick ratification vote on a cost-cutting labor deal negotiated last week. The union aims to complete those votes by Thursday.

Approval of the contract, which would change payment terms on $20 billion owed to a UAW trust fund, represents one of the hurdles for GM to clear before a June 1 deadline set by the Obama administration.

But bondholders have balked at proposals that they forgive debt in exchange for a 10 percent stake in a restructured company.

Under GM's current plan, a UAW trust fund for healthcare would receive a GM stake of about 39 percent. The U.S. Treasury would hold a 50 percent stake. Current shareholders would be left with just 1 percent of a restructured company.

A person familiar with Obama administration thinking on the matter said the administration was continuing to engage with bondholders to reach agreement.

Shares of GM, which the automaker has warned could be worthless in a bankruptcy, were down 20 cents or 14 percent at $1.23 on the New York Stock Exchange on Tuesday.

The U.S. government has provided a combined $36.6 billion to GM, Chrysler and their financing units since December.

In an interview broadcast over the weekend, Obama said he hoped GM and Chrysler would emerge from restructuring "leaner, meaner, more competitive."

"Ultimately, I think that GM is going to be a strong company," he said.

THE OPEL SAGA

While much attention is on Washington and Detroit, talks continue in Europe over the possible sale of GM's Opel unit.

On Tuesday, Germany pressed the three bidders for Opel to improve their offers for the carmaker, saying they needed to assume greater risks and make credible commitments to preserve jobs and sites.

Economy Minister Karl-Theodor zu Guttenberg told reporters after meeting Fiat Chief Executive Sergio Marchionne in Berlin that the Italian carmaker's offer looked serious but that rival bidders Magna and RHJ International remained in contention.

"There's no favorite," he said. "Everyone knows that improvements are still necessary."

Fiat made an aggressive last-ditch push to convince the German government to back its bid for Opel ahead of a top-level meeting in Berlin on Wednesday where a preliminary decision on preferred bidders is expected.

Marchionne met with Chancellor Angela Merkel and Guttenberg on Tuesday morning to try to address German concerns about his ambitious plan to fold Opel into a transatlantic car empire that would also include U.S. carmaker Chrysler.

The German government hoped to be able to settle on one or more preferred bidders late Tuesday or Wednesday, a step which could lead to further negotiations.

Pressure to choose a preferred bidder is building ahead of the June 1 restructuring deadline for GM.

Across the border in Canada, GM workers at plants in Ontario on Monday ratified concessions negotiated last week with a vote of 86 percent in favor.
 

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DETROIT/NEW YORK (Reuters) – General Motors Corp has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the largest-ever U.S. industrial bankruptcy by the end of this month.

The largest U.S. automaker had so far failed to gain anywhere near the 90 percent of bondholder support desired to stave off bankruptcy, two sources familiar with the discussions told Reuters on Tuesday. Bondholders have until midnight to make their final decision on the tender.

As of midday Tuesday, the source said the company had only "low-single-digit" interest from bondholders.

Reuters' sources said GM will likely file for bankruptcy some time after midnight Tuesday, but before June 1.

The failure to gain bondholder support is a critical disappointment for GM, the largest U.S. automaker and once considered the standard-bearer of all U.S. manufacturing. In the 1950s, a popular ad for the automaker proclaimed that "What's good for General Motors, is good for the USA."

"I would say this is a sound rejection of an unsuitable offer," said Pete Hastings, a credit analyst at Morgan Keegan who has followed GM. "I have been saying for some time that this thing was dead on arrival and we were just waiting for the doctor to pronounce it dead. Now that's happened."

As various deadlines near for the automaker, officials at the United Auto Workers' union will gather to hear how many U.S. factory jobs GM will cut as part of its restructuring.

Union officials representing 54,000 GM workers are scheduled to meet to prepare for a quick ratification vote on a cost-cutting labor deal negotiated last week. The union aims to complete those votes by Thursday.

Approval of the contract, which would change payment terms on $20 billion owed to a UAW trust fund, represents one of the hurdles for GM to clear before a June 1 deadline set by the Obama administration.

But bondholders have balked at proposals that they forgive debt in exchange for a 10 percent stake in a restructured company.

Under GM's current plan, a UAW trust fund for healthcare would receive a GM stake of about 39 percent. The U.S. Treasury would hold a 50 percent stake. Current shareholders would be left with just 1 percent of a restructured company.

A person familiar with Obama administration thinking on the matter said the administration was continuing to engage with bondholders to reach agreement.

Shares of GM, which the automaker has warned could be worthless in a bankruptcy, were down 20 cents or 14 percent at $1.23 on the New York Stock Exchange on Tuesday.

The U.S. government has provided a combined $36.6 billion to GM, Chrysler and their financing units since December.

In an interview broadcast over the weekend, Obama said he hoped GM and Chrysler would emerge from restructuring "leaner, meaner, more competitive."

"Ultimately, I think that GM is going to be a strong company," he said.

THE OPEL SAGA

While much attention is on Washington and Detroit, talks continue in Europe over the possible sale of GM's Opel unit.

On Tuesday, Germany pressed the three bidders for Opel to improve their offers for the carmaker, saying they needed to assume greater risks and make credible commitments to preserve jobs and sites.

Economy Minister Karl-Theodor zu Guttenberg told reporters after meeting Fiat Chief Executive Sergio Marchionne in Berlin that the Italian carmaker's offer looked serious but that rival bidders Magna and RHJ International remained in contention.

"There's no favorite," he said. "Everyone knows that improvements are still necessary."

Fiat made an aggressive last-ditch push to convince the German government to back its bid for Opel ahead of a top-level meeting in Berlin on Wednesday where a preliminary decision on preferred bidders is expected.

Marchionne met with Chancellor Angela Merkel and Guttenberg on Tuesday morning to try to address German concerns about his ambitious plan to fold Opel into a transatlantic car empire that would also include U.S. carmaker Chrysler.

The German government hoped to be able to settle on one or more preferred bidders late Tuesday or Wednesday, a step which could lead to further negotiations.

Pressure to choose a preferred bidder is building ahead of the June 1 restructuring deadline for GM.

Across the border in Canada, GM workers at plants in Ontario on Monday ratified concessions negotiated last week with a vote of 86 percent in favor.

Really, this is expected news. Why should they accept and equity share in a sinking Titanic-like corporation? Recall all the hoopla on this forum about GM's profitability??? Where is our skyispurple legal mind 65MGB/007GXP when you wish to really see the egg on his face?
 

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Finally, now that it will be declared, its time to restructure. Eliminate the UAW or reduce them to next to nothing or GM will proved that it hasn't learned a thing. It is a joke that the UAW thinks they have a say in this matter in the first place.
 

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DETROIT/NEW YORK (Reuters) – General Motors Corp has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the largest-ever U.S. industrial bankruptcy by the end of this month.

Reuters' sources said GM will likely file for bankruptcy some time after midnight Tuesday, but before June 1.
If this happens, TWO of the Detroit "Big 3" in bankruptcy and the third in the intensive care unit. Who'd a thunk it? :cryin:

P.S.
Hang on to your socks when all the unintended and unforeseen consequences strike the entire (not just automotive) economy.
 

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And why shouldn't the UAW have a say?
I think they should have a say...but on the other hand, the UAW is a contributing factor to the demise of GM. Granted GM management should have done more to fight the UAW demands of the past few decades...but hard to sell cars when your plants are shut down by strikes. The joys of unionized labor.

Look at the AMERICAN factory workers working in AMERICAN plants for other auto manufactures (IE: Toyota). Still taken care of, but at a substantially lower cost per employee in terms of wages and benefits. Who knows where GM would be if they were like afore mentioned Toyota with a 25-35% lower cost/employee.
 

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BANKRUPTCY?? :cuss: It's about time, I wanted them to file last year, been predicting this since, and when Obamass fire Wagoner, it was inevitable.. .. Shoulda been done way before my (and yours) tax dollars got pored into a sinking doomed ship.. Do it NOW!! :toetap: Dranoo any one?? :devil::lurk:
 

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BANKRUPTCY?? :cuss: It's about time, I wanted them to file last year, been predicting this since, and when Obamass fire Wagoner, it was inevitable.
The government was perfectly within their right as a 50% equity holder to fire anyone that they felt weren't the job necessary to save the company. If it had been Warren Buffet that were a 50% equity holder of GM stock instead of Uncle Sam, I doubt people would be throwing such a fit over it. This is business, nothing else. The administration stepped in too late to save a ship that had been sinking for the last four decades. Bankruptcy won't help unless GM can trim itself down and purge it self of the UAW waste and abysmal business practices of it's past. So unless "Obamass", as you so eloquently put it. Somehow invented a time machine and traveled back to the 70's when this all started. I doubt you can legitimately lay blame at his feet. Besides, if you truly feel bad for Wagoner you could always write him a letter and tell him how bad you feel about him being forced out. Though I doubt he would read it since he's probably busy spending his fat 20 million retirement package. That poor guy........ now even I feel bad for him.
 

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When the employees get to greedy they will price themselves out of a job. It happens over and over. People will only pay so much for transportation.
 

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It is a joke that the UAW thinks they have a say in this matter in the first place.
Well, they DO have (and should have) a say because of their -earned- pensions and medical benefits, if nothing else.

If their pensions and medical turn to smoke and they all have to go on the public dole (or be set out on the curb to die if they get sick), how much of a "joke" would that be????

You anti-union guys must have forgotten your history. Granted, at times the union pendulum has swung too far towards the union...but in the 20s and 30s in the auto industry, and even going back to the beginning of the Industrial Age, management has been more than willing to take advantage of labor. Don't like it when the shoe is on the other foot, eh? ;)

P.S.
Before anyone starts sputtering and blows a fuse, I have been 'management' and 'supervision' for the last 35 years, only being in a union once at CBS-TV because it was a condition of employment. But I grew up in Dearborn, Michigan (home of Ford) and was an informal student of the auto industry -- *lots* of horror stories of management abuse in the pre-union days.
 

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Considering how the Federal Government and you and me by extension, are now subsidizing said pensions and medical benefits, I think the UAW's say in the matter could also be diminished. If they truly cared about the well being of their employee's, perhaps they would have started making concessions a few years ago instead of lining their pockets until the last minute. Working for less is better than not working at all. Other auto manufactures in this country get by without the UAW and seem to have no hiring shortages, so it apparently can be done without the UAW.
 

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to me, the fundimental argument is that the Feds have no business buying any part of a private enterprise. Its not the business of the government to be in business.

And I find it interesting that an economic crash that to a great extent was promulgated by the feds is now being used as the justification for those same feds to take over private businesses that have large union membership and then turn around and give control of the businesses to the unions. It reads more like Catch 22 than real life.
 

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But, GM asked for the Federal government's help. They (GM) came came to Uncle Sam with their hands extended, looking for a handout. Did you really expect the government to just give away money with no strings attached?

Their intent was to purchase equity in GM, bring the company back to full strength and then sell that equity. It's no different than any stock broker. They intended to buy low and sell high. But somehow because it's the government doing it, it's wrong? GM asked for this, they had a choice and they made it.
 
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