General Motors, the once-upon-a-time largest US automaker is finally coming to terms with the bankruptcy scenarios that have been around for the past year or so.
GM had so far used up $19.4 billion in US Treasury loans but billions more are needed to keep the giant running. So the suggested a deal to their existing bondholders… an exchange offer that got easily rejected.
The 100 year old automaker has been trying to convince its bondholders to exchange their debt for equity in a newly formed company but as bondholders spurn the debt offer the company is heading for dead end and the bankruptcy filing is now certain, said analysts and lawyers.
The German government has not taken the news lighthearted and is trying to protect GM’s Opel unit by splitting the carmaker off from its US based parent company after 80 years. The Chancellor Angela Merkel is the hostess of a meeting taking place in Berlin later today where the future of Opel will be discussed. Ultimate goal would be to place Opel in a trust to receive further bridge financing of over $2 billion, governmental spokesperson Thomas Steg said.
GM, the US parent is supporting this act by transferring its European assets such as sales force, technology and plants to Adam Opel. GM Europe spokeswoman Karin Kirchner believes that this move will help ring-fence the Europen Open/Vauxhall operations from the prospective bankruptcy.
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