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GM bondholders change their mind

Yesterday, they said no way, we’re not taking a 10% stake. Today, bondholders are apparently okay with 10%, plus a little sweetner. GM has struck a deal with a committee of bondholders that gives them a 10% stake in the “new GM”. It also gives them the potential to buy another 15%.

More bondholders still have to approve the swap in the next 48 hours. And instead of preventing bankruptcy, the deal is more likely to grease the wheels for it. From CNN Money:

As part of a bankruptcy filing, GM would emerge with only its more profitable plants, brands, dealerships and contracts. The government with own 72.5% of the new GM and a trust fund run by the United Auto Workers would also have a 17.5% stake.

GM’s unprofitable plants, contracts and other liabilities that the company can no longer afford would be left behind in bankruptcy court.

In fact, the word this morning is that on Monday, GM will announce the closing of 14 factories as it heads into bankruptcy. 21,000 jobs could be lost.

• May 28, 2009 7:47 AM — Scott Jagow
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